Purchasing a property is the biggest
financial investment of your life and you need to look after it and make good
choices.
The
idea is that you can take out a mortgage loan to help you pay for the purchase
and as time goes by, the property accumulates in value. The longer you hold on
to it, the more value it will accumulate and when you decide to resell it, you
will hopefully be able to do so at a higher price compared to what you paid for
it.
Aside
from the passage of time, the state of the economy influences supply and demand
in the real estate market. In turn, price growth and property values and
various environmental factors affect the value of your property.
Some
aspects such as taking care of your home might fall within your control, but
others such as what is happening in the neighborhood or economy are usually
beyond your control.
What role does the economy play?
The
property market closely tracks the economy. During an economic boom, there is
usually more money around and consequently, more buyers and sales activity and
prices and property values tend to rise rapidly.
When
the inverse takes place, and the economy declines and there are fewer buyers
and sales and price growth usually decline meaning properties are not
appreciating as much in value.
During
an economic boom, you may see property values grow by as much as 7% to 12% and
even more depending on the area. During an economic decline, you are likely to
see growth, which is equivalent or outpaced by inflation, meaning that in real
terms, your property investment has not grown in value for that period.
The
current low-to-no growth economic phase due to the Covid-19 pandemic, has to a
degree been tempered by the low-interest rate.
It
has in sense affected the natural supply and demand working as it is boosting
demand in the market, hence we are seeing a level of price growth that is
contrary to what would ordinarily have resulted from the current economic
climate.
Should
the interest rate start climbing while the economy remains weak, buyer activity
and sales will likely decline, and price growth will slow as a result.
Demand
and supply is a big factor.
In
the popular price ranges, there is for example still healthy demand but with
equal supply, price growth remains constrained. Where there are fewer competing
properties, sellers would be able to get a slightly higher value for their
property.
Other factors which affect
property values
The
location is a prime influencer of the value. Aspects such as whether it is a
middle or upper-income area or an entry-level complex or luxury lifestyle
estate, whether it has views or is close to transport networks and these days,
whether it has access to fibre, all factor into the value.
Schools
and universities are a big priority and buyers will pay more for such a locatio.
Additionally, the size of the accommodation and land and style of the home play
a role.
It
is for example easier to sell a three bedroomed than a two-bedroomed home, but
anything above four bedrooms will not sell for a higher value.
The
condition is also a factor. Buyers pay more for a well-maintained and modern
home because most do not want to have to do any work on it. Sellers should
remember that their property competes with other similar properties and if it
is in a worse condition, it will have lower appeal.
Levies
can also be a dealbreaker. The levies in some complexes make it unaffordable
for buyers and sellers then have to be more accommodating with their asking prices
to compensate.
What might bring down a
property’s value?
Neglect
and poor maintenance and outdated finishes will most certainly impact the
value. It will also be affected if the neighborhood is poorly maintained or has
a high crime rate.
Security
has become a top priority for buyers. If you live in a neighborhood with
community safety initiatives, consider joining because, aside from a proactive
role in keeping your neighborhood safe, it also ensures property values are not
negatively affected by crime.
This article was first published by BusinessTech
Baoriat Agencies is committed to helping you find the best place for you to settle in Eldoret town. We walk you through the entire process of acquiring your own property in Eldoret until it has been transferred into your hands.
To learn more about buying a property in Eldoret,
Call 0721-554937
WhatsApp https://wa.me/0721-554937
Email evekibet@gmail.com or
Visit us at Juma Hajee Building room number 16, Eldoret town
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