5 Factors That Empower Real Estate Appreciation

Whether you’re looking to sell your home or invest in real estate, it helps to know what factors cause the price of a property to rise. If you’re selling your home, this knowledge will help you determine the right value or implement strategies to increase its value. If you want to invest in real estate, this will help ensure that you do not waste money on properties that will depreciate over time. Price appreciation refers to the increase in a real estate’s value over time. And the following factors can influence such appreciation.

1. Infrastructure development

One key determining factor is infrastructure development. The availability of transport networks, business developments, social amenities, and so on within a property’s location help drive population and demand. The more people troop to a particular location, whether for business, pleasure, or settlement, the more you can expect the property value in those areas to go up. 

It’s also important to look ahead when considering infrastructure development. A location may not have much infrastructure, but are there such plans for the near future? Do you see signs of such possibilities?

2. Location of the property

The property’s location is also another important influencing factor, and you can consider the value of apartment and store rents in places like London and New York as prime examples. The reason for this is pretty simple— the value of a property in a developed location is higher than one in an underdeveloped location. Some locations are more highly sought after (for various reasons) than others, and people will be willing to pay more for such locations. 

3. The builder’s reputation

Believe it or not, the real estate developer’s reputation plays a significant role in influencing the project’s value. Suppose a contractor, builder, or real estate developer has a solid reputation for constructing durable, long-lasting projects, meeting deadlines, using quality materials, etc. Such properties will most likely appreciate with time. That’s because they’ll have greater demand. On the other hand, if a developer is notorious for poor construction quality, using poor materials, and seeing some properties collapse due to poor quality, such properties will depreciate with time regardless of how good that particular structure’s quality is. 

4. Policy changes and local development

Policies surrounding development, such as lending rates, can also affect the value of a property. Demand increases when there are cheaper borrowing costs, which attracts more buyers to the market. Beyond the market policy changes, other policies can also affect a building’s appreciation. For example, in a society that promotes green policies, buildings that come with green covers, green paving solutions, etc., should see their value appreciate over time. Regarding local development, it is important that the immediate neighborhood where a property is located supports growth. 

5.  Age and condition of the property

A building that isn’t expected to stand the test of time will unlikely appreciate. Most home appraisers rate good properties based on their current and expected future conditions. A well-maintained property with visually appealing features will likely increase in value as it attracts more buyers.