Location is the first thing that affects the value of properties. If a given property is close to shopping mall, school, bank, hospital, restaurant, airport, church, temple, transportation facility, or any other place that offers some convenience to people staying at such area, the property will increase in value. A good example is Algarve property for sale. This is because the area will attract more people than other properties.
Demand and Supply
As far as real estate is concerned, the principle of demand and supply refers to ability of people to afford the real estate taking into account the scarcity of properties. Therefore, if there is high demand for a property, its price will increase. Also, property values do experience a drop if the demand is less and the supply is high. For example, you can find a small city with a huge population that is more than the population of large cities.
High population has been found to put a lot of pressure on the land use. This results in an increase of the property prices as the developers put an expensive price tag on projects because of the high cost of land. Also, if the area is a tourist attraction, then you are bound to pay more.
Other than location, and demand and supply, the science of construction can affect the property values. A lot of studies have revealed that property prices will keep changing no matter what. For instance, a property situated near a water body can be sold for a higher price as compared to a property in the same location which is not adjacent to the water body.
Also, a lot of people are attached to certain areas because of various things that they can relate with. For instance, some people believe that certain areas will bring steady growth, good luck, prosperity, happiness, positive energy, and good health to them. Thus, people consider carefully the placements and position of a property.
The truth is that inflation has an effect on property values around the world. At the basic level, inflation is the rise in prices or/and decrease in purchasing value of money. For instance, if there is an increase in the price of cement, it means that the cost of cement-related products will also increase.
Remember that most building materials are made of cement. Thus, when cement increases the cost of building materials increases, the total cost will be transferred to the buyer. Moreover, inflation will have an effect on the labor and transportation costs. However, rise in labor cost may be attributed to shortage of manpower.
Remember that the government can introduce or revise its existing property related policies. This will play a great role in determining the property values. For example, the government may be providing incentives to developers. This will result in a decreased property value. The good thing about this is that it increases the confidence of buyers and developers.
Also, mortgage rate can have an impact on property value. Ideally, this is based on the base lending rate that is set by the banks and other mortgage providers.