Updated: Oct 10, 2021
A common question among homeowners who are planning to put their home on the market is: "What factors affect property value?" While you may be aware of the importance of factors such as property market conditions and the size of the land, you may be surprised to learn that three unnoticeable factors also play a part in influencing the value of your property.
1. Location, location and location.
One of the most significant determinants of a home's value is its location. How far is it from public transports, schools, parks, shops or other local amenities? Is it located in a well-known local neighbourhood? Is it a short distance from a city or central business district (CBD)? The value of a property's location rises in direct proportion to its popularity and accessibility.
2. Public school catchment (hidden factor).
One of the hidden factors in location is the public school catchment of the property, and selling a house within a good public school catchment might raise its value significantly. According to the 2021 School Zones Report⭷ from Domain, school catchments can affect house price movement, with secondary school zones have a slightly more significant effect than primary school zones. Almost one-third of the house price for suburbs with the public school has risen annually and outperformed 10% more compared with the respective suburb the schools are located in. Many parents are willing to pay more for a house if it means their children will attend a better local school. If you don't live in the school district, you can still apply, but you won't guarantee a spot. For this reason, homes in desirable school districts generally sell for more money.
3. The market condition.
The state of the real estate market is affected by the economic factor, which is influenced by people's capacity to sell or buy a property. If the economy is thriving, more jobs and more money for people to spend on. People are more inclined to purchase a home or a property investment when their purchasing power grows. As a result of the rise in demand, property values will rise as well. A declined economy where unemployment is rising and less money earned means fewer people can purchase a property. As a result, property values will fall. It's critical to be up-to-date on the current market conditions when you plan to sell.
4. Local supply and demand (hidden factor).
In any market, prices are determined by the strengths of supply and demand. This also applied to the real estate market, especially the local market. To check the property supply, you need to check the number of properties similar to yours currently on the market for sale. Prices tend to fall when too many houses are for sale but not enough buyers in a specific location. To know your area's demand, you need to look at the "number of days on the market" data, which refers to the number of days between the day a house is listed on the market and the day it is sold. If there's a lot of interest in a particular neighbourhood's houses, the number will be low, and the prices will likely rise. If it takes a long time to sell a house, it means the demand is low.
5. The property.
Other factors that affect a property's value include its facilities, size and upgrades.
Features such as an extra bathroom, garage, study area, swimming pool, ducted aircon, solar panel and outdoor entertaining area can all increase the value of a property. A four-bedroom house is likely to sell for more than a three-bedroom house.
The size can refer to both land size and living area. The larger the land size, the higher the price, same with the living area size. That's why a double-storey house is likely to sell for more than a single-storey house, as the former has a larger living area.
Improvements and renovations.
Upgrades, improvements and home renovations can greatly boost the value of your home, particularly older homes with outdated features. Painting and changing the flooring are two of the most cost-effective ways to increase the value of your house. The other improvement to consider is the kitchen and bathroom renovation, and you might also think about expanding the number of bedrooms.
Street / kerb appeal.
A house's street appeals or outer appearance should never be overlooked. First impressions count a lot in real estate, so how a house looks from the outside can increase or decrease its worth.
6. The selling agent (hidden factor).
The most critical step in your selling process is finding an excellent real estate agent who will be your partner on the way from "for sale" to "sold".
A great real estate agent will get you a high selling price, and the wrong agent will produce a mediocre selling price. The agent factor explained why some properties sold for a higher price compared to other similar properties and why some sold for a lower price. Every agent has a different set of skills and their approach in selling. One of the essential skills the agent has to possess is their negotiation skill with the buyers.
An experienced real estate agent that is both licenced and has undergone years of training to gain a thorough knowledge of the local housing market can make your selling journey stress-free and successful. If you're wondering if you can sell your home without the assistance of a real estate agent, the answer is yes. However, if your goal is to sell your house for the highest possible price in the shortest amount of time, not working with a real estate agent may cause you to regret your decision to sell it on your own.
7. Interest rates.
One of the critical determinants of property value in Australia is the level of interest rates. Whenever the Reserve Bank of Australia decides to raise interest rates on loans, lenders or banks are forced to keep up with the rate increase. This will decrease the number of buyers in the market and decrease the buyer's borrowing power. For a homeowner with a mortgage will see a rise in their monthly mortgage payments. If the borrowers could not service the mortgage, a property owner defaults, and the bank sells the property up. The sale will have to be quick and resulted in a lower price. This lower price result will negatively affect the surrounding local price house. A decrease in interest rates, on the other hand, will make stimulate the property market and increase the house price.
8. The local buyers (hidden factor).
The selling price of a property will come down to how much the prospective buyer, willing to pay for the property. Each buyer will have a different price they are willing to pay for the same property because it all comes down to their perception of need and value. The need for buyers can be their need for specific property requirements. For example, buyers who have elderly lived together with them might need a single-storey property. These buyers will value a single-storey property more than buyers who need more living space, thus prefer a double-storey property. Buyer's needs can also be related to their time and urgency. Buyers who already sold their current property will have more urgency to buy into their next property quickly compared with first-home buyers who have no time constraints. This time constraint will make buyers less sensitive to the price and more willing to pay for a higher price to secure the property. This buyer factor is one factor that is not controllable that will affect the final selling price.
In summary, if you are thinking of selling your property you need to know these obvious and not so apparent factors that will influence your property selling price:
Four obvious factors:
Location, location and location.
The market condition.
The property, includes features, sizes, improvements and street appeal.
The interest rates.
Four hidden factors:
The real estate agent.
Public school catchment.
Local supply and demand.
The local buyers.
➞ Related: How to online research your property value.
If you're thinking about selling your home, you need to talk with Irving Gunawan from Ray White Kellyville, and see why he has some of the best selling results for his clients. Start your selling journey with a free real estate consultation.
Irving Gunawan | RayWhite Kellyville Licensed Real Estate Agent
📞 0468 956 677