What Drives Price Increases In Real Estate Industry

The longer you wait, the higher the prices get.

Whether it’s a house and lot in Daang Hari or a condominium in Tagaytay, many of the most beautiful houses in the Philippines are affected by the current real estate market trends.

Home value in the real estate market has had a noticeable increase over the years. House and lot properties for sale often experience a rise in real estate prices along with condos for sale. And it’s not just a local thing. Price increases in this industry happen all over the world.

It is a little intimidating to know about it, however, if you learn about the many factors that affect this phenomenon in the housing market, you’ll understand that the rise in home value is part of the game and everyday life.

Here are some of the major ones that significantly impact real estate prices.

Factors that affect commercial real estate prices and home value

Multiple interconnected factors can affect home sales for a real estate agent. Considering these factors within your family will help you find the best offer to grab in the real estate market.

Location of a real estate investment

First on the list is location. A home’s value can depend upon the location of the house. Properties that are near public infrastructures cost more compared to other areas that are far away. This is because of the desirability of the location. It is what causes the home value to increase.

Investors and normal buyers opt for a property that has easy access to shops, schools, and other public amenities for their family life. Raising a family in this kind of neighborhood is convenient and will satisfy the family values of potential residents. Moreover, it will be easier to travel to work when your house is only a few miles away. Distance from work to the house can have an important role in overall health, especially physical and mental health.

Being near shopping malls, churches, and hospitals increases the desirability of houses and lot properties for sale, making them have high-interest rates. It’s a luxury living experience to be able to enjoy nearby cafes when you need to unwind. Accessible transportation is also part of the assessment of the market value of a property which makes it costly but worth it. A house and lot in Daang Hari is an example of a property near necessary infrastructure. For sure, house and lot in Daang Hari will pass your housing requirements.

Size and Condition

Aside from the location, house listings also consider the size and condition of the property as important elements in price valuation. Home value is often estimated in price per square foot area.

The amount of space used in a home affects its value. Usable areas inside a house do not typically include attics, garages, and basements. So, even if your property has a 5,000 square feet area, but 800 square feet belongs to the basement, the total amount of space that can be used is just 4,200 square feet.

Investors and buyers look into the amount of livable space when purchasing. The most valuable rooms in an estate are the bedrooms and bathrooms, so in general, a property is more expensive when it has more bedrooms and bathrooms, not to mention the construction costs of the home.

Aside from the size, prices may also depend upon the condition of a house to accommodate a family member. To put it into perspective, real estate mansions cost more than a condominium in Tagaytay in size. It has a space that usually attracts tenants. However, if the said mansion is in poor condition, that condominium in Tagaytay might sell for a higher price.

More recent homes often sell for a higher amount of money. Older homes are for sure at lower interest rates. Potential residents can save money if they purchase a home with recent roofing, plumbing, electrical wiring, appliance systems, and furniture because they are less likely to cause fixing problems. If you’re planning to sell your property to potential buyers for a higher price, you might want to consider a necessary house check and renovation to make it a suitable deal up for grabs.

Home Value Comparables

Also known as “comps,” comparable homes can determine home value. This works because recently sold comps are compared with other similar houses in terms of sale prices. A real estate agent might conduct an open-door evaluation, an analysis, or an appraisal and depend on comparables to provide an estimation of your home value.

Sub-factors such as location, distance, similarity in-home features, and recency must be taken into consideration when evaluating comparable homes. Doing this manually can be a long task, so it is best to leave it for computers to analyze.

Demographics

A neighborhood’s demographics can also significantly affect the price of a house and lot for sale. The behavior of a home value may depend on several statistics, such as employment rates, income rates, and other indicators. These will reveal the costs of properties in a certain area and the types of an estate in demand.

There are plenty of demographic trends that have the potential to create a significant impact on the real estate market. One example is the baby boomers, born between 1945 and 1964. This generation’s retirement, which started in 2010, will continue to be observed in the industry in the next few years.

Socioeconomic factors like these have long been known to play a role in predicting real estate trends.

Interest Rates in the Real Estate Market

The growth of interest rates can also influence property value. The capability of a buyer to acquire commercial real estate or a residential one might depend on the changes in interest rates. This is due to the fact that as interest rates decline, mortgage application fees decrease, increasing the demand for real estate properties and driving up their prices.

Both short-term interest rates like credit cards and long-term interest rates like mortgages will affect your purchasing power but in different ways. Your savings may earn more income if short-term interest rates rise, but short-term debt becomes more expensive. You might not have as much money in your budget to buy a home. To elaborate, buying a house and lot for sale might become a far-fetched goal if you’re spending more money paying down a credit card or a short-term loan. The issue is that if loan rates rise, fewer individuals would be able to buy homes, which could affect how much cash you can get for your house when you sell it. It is advantageous to use a mortgage calculator to examine interest rates if you’re thinking about getting a mortgage to buy a house.

When looking at the impact of interest rates on investments such as a real estate investment trust (REIT), the relationship can be seen as analogous to the relationship of interest rates on bonds. A bond’s value increases when interest rates fall, and it falls when interest rates begin to climb. Like this, high returns on REITs become more alluring, and their value increases as market interest rates decline. The income of a REIT becomes less appealing whenever interest rates increase, this lowers its value.

Government Rules and Regulations and Home Values

Other elements that can significantly impact the demand and home value of real estate are the rules and regulations of the state. For as long as they are in effect, deductions on taxes, tax credits, and subsidies are a few techniques the government utilizes to ignite a temporary increase in real estate demand, affecting the prices of house and lot properties for sale. This might get out of hand because it is beyond your control, but understanding current government incentives and policies will enable you to spot potentially misleading patterns and gauge changes in supply and demand.

Economic matters

The situation of the economy as a whole also has a significant impact on the value of real estate. Like the rest of the world, economic metrics like the Gross Domestic Product, employment rates, imports and exports, retail pricing, and more are typically used to estimate home value. One can say that the real estate industry suffers when the economy is weak.

Economic issues like inflation can affect a person’s ability to buy or sell a property. In slow-moving economies, the real estate market will suffer. As an example, if employment or income growth is delayed, fewer people will afford to buy any house or lot for sale. There will also be fewer chances to relocate to a condominium in Tagaytay.

This is why it’s essential to keep up with the current status of the economy. The home value will be easier to monitor whether you’re buying or selling a house.

Buying a house must feel fulfilling. Knowing how home value is evaluated in the real estate market will make you give all the effort to purchase a worthy deal. Having the knowledge for it is an important skill.

If you’re looking for the best offer, Brittany Corporation has many of the most beautiful houses in the Philippines. Check out their house and lot properties for sale as you consider the factors driving real estate prices. Remember, the longer you wait, the higher they get, so invest as early as you can.

Suggested Read: Philippines Interest Rates For Real Estate In 2022

Suggested Read: Portofino Alabang Sees Strong Price Appreciation

Suggested Read: How To Tell Your Client About Price Increases

Suggested Read: 9 Factors Affecting Value Appreciation

Suggested Read: Investing In Portofino’s Luxury Homes