Property News

General factors

Some factors apply across the board, regardless of property type, size, location or price bracket. We've highlighted a few of the most significant of these factors.

Mortgage rates
Almost everyone with a mortgage will have been watching interest rates anxiously over the last year. After many years of unprecedently low rates, we've now re-entered a period (which most economists would tell us is a more normal state of affairs) of relatively high interest rates. Obviously, this affects purchasing power across the economy, but most particularly for anyone with significant debt. A mortgage is a significant debt by any standard, and although it's not an exact science, higher mortgage interest rates usually feed through to the housing market, dampening sold property prices as the spending power of would-be buyers decreases.

Population demographics
A growing population almost inevitably demands more housing. So, too, does a rise in the number of single person households. The UK is experiencing both of these factors, and this is reflected in property values and prices as more people compete for housing.

Supply and demand
Although linked to population demographics, supply and demand frequently has very local effects. For example, it's common for properties in a particular area to experience a rise in their average selling price even as comparable properties in a neighbouring area drop in value. The result tends to squeeze property values in the more desirable neighbourhood up even further.

Real income level
Everyone knows that the figure on a payslip or even the numbers in the income column on a bank statement don't always correlate to spending power. When prices are high for necessities and non-negotiables such as food, fuel and council tax, people have less money to spend on other things. Frequently, those other things will include property purchases. When money is tight - or feels tight - people are less willing to stretch themselves on a property purchase. Some sellers will sit tight and hope that the purse strings are eventually loosened, but others will have no choice but to sell for less than they'd hoped. Once enough sellers are in this category, property values start to fall.

Demand for space
One of the most striking consequences of the Covid-19 pandemic was the rise in demand for more spacious homes. Buyers wanted enough room for home working and, frequently, more private outdoor space. As a result, homes that best fitted the bill rose in value. Although less marked, this effect still lingers in the current property market.

Property specific factors

As any buyer or seller knows, the property itself is highly significant when it comes to working out how much it's worth.

Size
In some ways, it would be easier if a property's value was calculated in relation to its floor space. And, to some extent, this is the basis for many initial valuations. However, size as an isolated factor is not sufficient to calculate how much a property is worth.

Location
We all know that location can add thousands, tens of thousands, or even hundreds of thousands to property values. We also all know about people who bought a place cheaply, lived in it - often for decades but sometimes for much shorter periods - while, around them, a once unfashionable neighbourhood became fashionable or desirable. It's such an easy way to see your property's value rise that some buyers will actively seek out up-and-coming areas in the hope of benefitting in the future. Unfortunately, exactly what makes a neighbourhood desirable isn't always quantifiable.

State of repair
Clearly, the state of repair plays into how much a property is worth. However, that's not to say that a buyer can instantly knock off a nought or two from the asking price of a place that's in need of work. Many sellers will adjust their asking prices to take account of work that's needed and will treat cheeky offers with contempt. Of course, sometimes the extent of work that's needed isn't immediately apparent, either to the seller or the buyer. This is where a structural survey really comes into its own.

House and street name
Laugh if you wish, but street name and, if it has one, house name, can affect a property's value. House names tend to have less effect due to their potential to change them. However, street names are far less easily altered - and how do you feel about living on Crotch Crescent, Butt Hill Road, or Bell End?

Neighbours
Like them or loathe them, the neighbours come with the purchase. The best chance of avoiding a bad set is before signing on the dotted line - and this is why sellers have an obligation to declare any disputes with neighbours. Loud, socially disruptive neighbours or those with properties in very poor states of repair can easily drag down the value of neighbouring homes.

Nearby developments or planned developments
This can go one of two ways. Some nearby developments have positive effects on asking and sold property prices. A typical example might be a new nearby rail link. Others will have the opposite effect: for example, a large housing estate being built on fields opposite an existing home.

Age and listing status
A property's age doesn't always affect its value. However, depending on the circumstances, it can have a significant effect. For example, an old, architecturally significant property (especially if it's in good repair) might be worth more than other relevant factors would suggest that it's worth. Equally, a listed property may lose value due to the perceived increased costs in maintaining that property to the required standards. And an old, energy-inefficient property may also be worth less as a result of the increased costs of heating it and, where possible, of making it more energy efficient.

Potential for development
Properties ripe for development frequently fetch more than their asking price. Although development potential is usually taken as referring to development by a property developer (for example, a small house on a large plot or a big house that's ripe for conversion into flats), this won't always be the case. Even small-ish suburban family homes can be marketed as "ripe for development" (usually by a family buyer) - and, if enough buyers agree, the eventual selling price will rise.

Local amenities
Transport links, shops, entertainment facilities, parks, and access to the countryside all affect property values.

School catchment
Worthy of its own category, many people will move areas and pay hundreds of thousands more for a home in the "right" school catchment area.

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