real estate-factors that hinder value appreciation of a property
In real estate, value is the perception of the buyer. Value plays a predominant role in real estate. Most of the problems that hinder value appreciation of a property is more of physical and psychological things. The value of a property has more to do with human sentiments. Some of the factors that influence the value appreciation of a property are:
1. CONDITION OF PROPERTY
The condition of the property is a very vital point considered for value estimation of a property. A property in a deteriorating state will definitely have a reduction in value. Some properties have so much deteriorated that they sink over time. Imagine a house with broken tiles, damaged drainage system, washed-off paint and broken glasses. Such condition definitely has a negative effect on the value of the property.
2. POWER
In real estate, power is very important in rental value. Places that have constant and reliable power supply readily experience appreciation in the value of properties located within such area. Properties include both land and buildings. There is a place in Lagos mainland in , very close to a government specialist hospital where residents often enjoy a good power supply. For this reason, rental value of properties in this place is high. The cost of a two-bedroom flat in that environment is higher than a three-bedroom flat in another environment. Constant power supply attracted such high rental value.
3. URGENCY TO SELL
Urgency to sell a property badly affects the value of such property. When a property owner needs money urgently, buyers tend to capitalize on that factor and price such property below its value. Urgency to sell is a problem created by the seller himself. In real estate business, there are real estate investors normally searching for properties on the down side, which are properties that the owners need quick money to solve a serious problem. Such circumstances make the owners ready to sell at any price to the owners disadvantage and to the buyers advantage. Urgency to sell a property reduces the value of the property and value is the worth of the property.
4. CRIME
Security of lives and property is very essential to mankind. People don’t want to live or work in a place where there lives and properties are not secured. As such, real properties that are located in crime-prone areas hardly experience value appreciation. Some places are more volatile than others and the higher the volatility of a place the lower the value appreciation of real properties located in such area. Security is an additional factor to value appreciation in real estate.
5. DETERIORATING INFRASTRUCTURE
In real estate, Infrastructure plays a major role in value appreciation of a property. There are many causes of deterioration in infrastructure. Lack of maintenance culture affects the value of a real property. Bad drainage could lead to flooding environment and erosion could wear away road and all these will affect the value of real properties located in such areas. Nobody wants to live in areas with bad roads and bad land topography. Locations suffering from deteriorating infrastructure also suffer from value appreciation.
6.TRAFFIC
Traffic is another factor that seriously affects the rental value of real properties in an area. Everybody is scared of traffic. Nobody wants to waste useful time stuck in a traffic congestion. Real properties located in places prone to high traffic congestion usually have less patronage, hence lower value appreciation. Akute area of Lagos state have lower rental value than Ojodu Berger, but most of the real proprieties in Akute are aesthetically better than those in Ojodu. The real properties in Akute are also new unlike the old ones in Ojodu, but the rental value is lower than those in Ojodu. The cause is that there is only one road that leads to Akute and traffic is always heavy on that road, hence people are scared to live there. Here, traffic becomes the main factor that determines value appreciation of the real properties.
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