jlk – Who wouldn’t want to own property, be it a house, an apartment, or land? Property is one of the most sought-after assets by the public because its value keeps increasing from year to year.
It’s no wonder that many people consider property as a profitable long-term investment.
However, do you know what factors drive property prices to skyrocket? Is it only because of high demand, or are there other factors?
Let’s uncover together the factors driving property prices up below!
Inflation
Inflation is the general and continuous increase in the prices of goods and services over a period of time.
Inflation can be caused by various factors, such as high demand, increasing production costs, expanding money supply, or economic and political turmoil.
Inflation affects property prices because it makes the cost of property development more expensive.
For example, the prices of building materials, labor wages, taxes, and so on. Inflation also affects the interest rates of home ownership loans (mortgages), making house installments larger.
Demand
Demand is the amount of goods or services desired by consumers at a certain price and time. Property demand is influenced by various factors, such as income, preferences, tastes, population size, and others.
Economic laws state that if the demand for a good or service increases, then the price of that good or service will also increase, provided that the supply remains constant or decreases.
This also applies to property. The more people need housing, the higher the property prices.
Supply
Supply is the amount of goods or services offered by producers at a certain price and time. Property supply is influenced by various factors, such as production costs, technology, competition, expectations, and others.
Economic laws state that if the supply of a good or service decreases, then the price of that good or service will increase, provided that the demand remains constant or increases.
This also applies to property. The fewer properties available on the market, the higher the property prices.
Location
Location is one of the main factors determining property prices. Location includes the physical and social environment around the property. Factors that affect property prices in terms of location include:
Accessibility. Properties that are easily accessible by public transportation, close to business centers, shopping areas, education, health facilities, etc., will have higher prices than properties far from these facilities.
Security. Properties located in safe, comfortable, and orderly environments will have higher prices than properties in areas prone to crime, disasters, or social conflicts.
Comfort. Properties located in clean, cool, green, and scenic environments will have higher prices than properties in dirty, hot, polluted, and noisy environments.
Physical Condition
Physical condition refers to the physical state of the property, such as size, design, quality, age, and facilities. The physical condition of the property greatly affects its value and selling price because it reflects the quality and comfort of the property.
Factors that affect property prices in terms of physical condition include:
Size. Properties with large land and building areas will have higher prices than properties with small land and building areas.
Design. Properties with attractive, modern designs that match market tastes will have higher prices than properties with ordinary, old-fashioned designs that do not match market tastes.
Quality. Properties with good, strong, and durable building quality will have higher prices than properties with poor, fragile, and easily damaged building quality.
Age. Properties with newer building ages will have higher prices than properties with older building ages.
Facilities. Properties with complete facilities such as electricity, water, telephone, internet, security, parking, etc., will have higher prices than properties with inadequate or no facilities.
So, those are some of the factors driving property prices soaring high. Hopefully, this article is beneficial and adds to your insights into the world of property.
That’s it for now Kisanak.