A question that often crosses the minds of both the home buyers as well as homeowners is ‘what are the factors influencing the cost of a property?’ Having a detailed answer to this question would help potential home-buyers to make the right choice in buying property. Most prospective buyers already have an idea of what they want in a home – proximity to parks and green areas, lower air or noise pollution, lower traffic volumes, good roads, etc.
Along with these features, knowledge of other factors influencing property prices would help the home-buyer benefit greatly and enable them to invest in projects that require lower investment and higher returns in the coming years. Here is a list of some factors to look into before buying a property:
Demand and supply
It’s well known that high demand with lower supply results in higher prices. And a reverse situation results in lower prices – as was the case during 2017 when GST and demonetization created confusion in the realty business.
Home loan rates
Home loan rates have an interesting effect on property prices too. High-interest rates tend to put off potential homebuyers from investing as they don’t want to spend extra on the interest rates. But when the rates are lower, it boosts buying, resulting in a greater demand for properties. The seller then has greater control over the selling rates.
The strength of the overall economy has a significant impact on the real estate trends too. This is because key factors like unemployment, income growth and GDP all influence the homebuyer’s financial ability for investing in properties. The recession of 2008 underscores this link between real estate and the overall economy.
Steady job growth
Sustained job growth, especially in localities where there are numerous businesses and industries, can also have property prices surging. An example is the IT industry in Trivandrum which has boosted property prices and sales in the city. Demand for office space is a great indicator of a strong residential and commercial market.
Certain areas have zoning regulations where there is a limited amount of construction allowed with more open spaces being conserved for greenery, etc. Such regulatory factors have an impact on the allure of real estate in these areas, raising their property prices.
Any location with good infrastructure holds a greater attraction for homebuyers. Likewise, the cost of properties in such areas is also higher. Facilities such as good road and rail connections, easy accessibility to schools, hospitals and shopping centres, all tend to influence property prices too.