FACTORS AFFECTING PROPERTY VALUE

FACTORS AFFECTING PROPERTY VALUE

Property value is influenced by many factors. Some of the factors include

1. Location of the property: Land located in urban areas is of higher value than that of rural areas. This is often due to the demand for it; there is high competition for a land in an urban area. Professionals in real estate business will  always acknowledge the initial importance of location to property investment even within urban areas. Ifediora (1993) postulated that any part of the city cut off from the rest of the metropolis as a result of poor access road, lack of transportation roads will command a relatively low value. Whereas areas with good network of roads which can lead them to different parts of the city is capable of commanding a higher value.
2. Planning control: The power of planning in today’s world is very great indeed. Restriction policies might cause values to be higher than would normally occur. Balchin and Kieve (1982) observed that the prohibition of office development in central London between 1965 and 1970 created scarcity and resulted in rapidly rising rents and capital value. Control of land uses by the government takes place through laws like zoning regulations which can be land use zoning, bulk zoning, height zoning and density zoning. Developers must comply with zoning regulations and obtain planning approval for the usage and improvement of land. Haphazard development is not only prevented but land value is also enhanced t through various planning regulations.
3. Population: Oyebanji (2003) described population change as occurring in two ways namely decrease in population or increase in population. Any increase or decrease in population will obviously affect property values (Millington, 1982). Take for instance, an increase in population with other factors held constant, means an increase in demand.
4. Environment and Features: Akintunde (2009) sees environment as an external factor that impact on property value. To him environment factor include neighbourhood, in term of its general security, servicing and state of public infrastructure ( good access roads and drains, water and electricity) topography, soil type ( dry or swampy), amenity provision level ( i.e. accessibility to schools, hospitals, shopping/ market facilities, sports, social club etc.) as well as the aesthetic quality of the area. Features on the other hand includes; green area, adequate provision for parking, good perimeter fence with security devices, children play area, swimming pool, gymnasium, water treatment plant, well paved road, quality plumbing work etc. Any property with all the above will definitely command high value than the one that have less of these features and environment quality. Some scholars refers to feature as utility
5. Quality design and finishing: The internal arrangement of bedrooms with a provision for bathroom and toilet portends convenience. A house that has good ventilation will no doubt enhance healthy living.
6. Good maintenance practices: Akintunde (2009) observed that for properties to command high value, owners must ensure that there is adequate provision for maintenance of the building. This will prevent frequent repair and ensure that the property is in good state of repair.
7. Economic Factors: This factor influences the value of land and property a great deal. Where many activities take place the value of land will surely rise because there is always a possibility to recoup back the money after a short period of time. While areas of low economic activities will bring about a low level in land value.
8. Institutional Factors: These are factors relating to the people’s culture, religious belief and government which invariably dictate what land is used for in the society. The consequential effect is either low or high property value. People’s culture and religious belief tend to limit or shield away valuable land area for economically viable uses such as hotel. In an attempt to make land and housing available for every member of the public at affordable cost, government can introduce certain policy or enact laws to that effect (land reforms programmes).
9. Technological Factors: The level of technological development can affect the value of a land. The value of property is high in certain areas because improved technological equipments and social amenities such as central sewage system, good lift system as well as central cooling system to mention a few are available.
10. Complementary Uses: Since land uses are independent with man and his economic activities, this thereby brings about mixed uses and areas with complementary uses have high values. As such, economic activity blossom where there are other complementary uses and concentration of activities such as Motor Park and a nearby shopping center.
11. Change in Taste and Fashion: People tend to develop taste for modern buildings. This is as result of civilization and new innovations. Potential purchasers prefer to purchase or lease a house of modern design coupled with fashionable finishes. This thereby brings about an increase in value of land in the urban areas while values fall in the rural areas.

REFERENCES

OLANIPEKUN T. A. (2010) IMPACT OF URBAN RENEWAL ON PROPERTY VALUES. DEPARTMENT OF ESTATE MANAGEMENT YABA COLLEGE OF TECHNOLOGY YABA, LAGOS. A Journal of Estate Surveying Research, (December 2010) 80 -89

Akintunde, Femi. (200 ): Facility management as a defensive strategy to maximize value of real estate assets during economic recession.

Oyebanji, A.O. (2003): Principle of Land use Economics, Lagos, Sam Otu Nigeria Company

Balchin P.N & Kieve J.L (1982): Urban land economics, Hong Kong, The Macmillan Press limited,