The 8 Main Factors That Influence Real Estate Valuations

Whether it’s for insurance purposes, family law, family succession or in preparation to sell, not only is it essential to have your property professionally valued, but it’s important to understand the factors that affect a valuation before it is conducted. This allows for accurate insurance coverage, fair asset division and preparedness to sell.

1. Property Size and Features
   The square meterage of a property’s dwelling, land size and extras such as a pool or tennis court all represent important factors in valuations. While a substantial existing home will obviously add value, the land holds an incredible amount of value in its potential for further development of the property.
2. The Local Market
   One of the most effective measures in determining valuations are the recent sale prices of comparable homes in the local area. This is a strong indication of the area’s popularity and property demand. Looking into historic area sales as well as active listings in your area is an excellent way to increase your understanding of the market, in addition to obtaining a professional valuation.
3. “Location, location, location.”
   The land and infrastructure surrounding your home influences its value tremendously. Proximity to local shops, schools, business districts, social housing and public transport will play a huge role in determining your property’s value.
4. Interest Rates
   The interest rates set by the Reserve Bank are another impacting factor likely to affect your property’s value. Low-interest rates generally lead to higher property prices as borrowing is made more affordable. We anticipate significant increases in interest rates over the next 2 years and a corresponding drop in Home and apartment prices.
5. Demographics
   Local area demographics dictate your property’s appeal to the market and consequently, its value. These factors primarily include age, income, education, population density and growth rate.
6. Age and Condition
   Naturally, the better the condition of a property, the higher its value. Whether it is new or old, ensuring your property is well maintained, both inside and out, offers the best chance of a high return when it comes time to sell.
7. Area Demand
   As the demand for property rises, so do property prices. This is even more so the case when there is insufficient supply. Due to the impact of Covid, there has been a significant increase in property demand in suburbs away from major cities in Australia, as many seek to leave population-dense areas. In turn, these areas have received significantly higher property valuations, making it a ‘seller’s market’.
8. Street Appeal
   When it comes to real estate, oftentimes you can judge a book by its cover. First impressions are of grave importance and are a strong indicator of what a potential buyer can expect the interior of a property to look like.

Summary

Whether you’re seeking to sell or obtain a property, understanding the major factors that determine property values affords you the opportunity to make any necessary changes to the dwelling before it is valued or put on the market. This allows you to be fully prepared for a professional valuation, which will ensure your property is represented accurately and you receive the best possible return.