Factors That Lower The Value Of Your Property
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Loading... - Azzam Kengne
- 10 Oct 2022
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Whether you are selling or buying an investment property or home, you need to consider what the property is worth. Property values rise and fall in cycles all around the world, influenced by factors such as the economy, interest rates, and employment. As homeowners, we are happy when the value of our property rises but sometimes factors beyond our control cause values to plummet. So, what factors have a negative impact on property value? Read on to find out the factors that bring property values down and how you can determine what your investment property or home is worth.
What is the property value?
Property value refers to the fair market value of a given piece of real estate. As such, this is the worth of a piece of real estate based on the price that a buyer and seller agree upon.
6 factors that bring property values down
1. The economy
The state of the economy as a whole can have a significant impact on the real estate market. The broader economy has a bearing on a person’s capacity to buy or sell a home. As a result, in times of weaker economic growth, the housing market may struggle. When the economy is in poor shape, incomes decline, unemployment rises, homeownership is jeopardised, and people have less money to spend on real estate purchases. Subsequently, the prices of property will also drop.
2. Interest rates
Why care about interest rates? Both short-term and long-term interest rates influence a buyer’s ability to afford a home. When interest rates increase, home affordability is less in reach for many buyers. Buyers can’t afford to spend as much on the initial purchase price because their monthly mortgage payments are higher and they have to pay more over the life of the loan. As a result, sellers may be forced to reduce their asking price to attract more buyers. High interest rates can also drive a shift towards renting property as it becomes the more affordable option. Read More...
