Six important Reasons why real estate increases in value
Real estate is most likely the best and largest investment in the Kenya. The majority of middle-class people put
all of their money into their homes. The fact that property prices have increased
enormously in many areas In Kenya
support this. The first idea that comes to an investors’ mind
when entering into real estate business is getting maximum returns.
Land appreciates because
there is a scarcity of
it. As a result, as the population grows, so does the
demand for land, making
the price to rise with time. Owning land allows you to
sell your first property to fund other
investments such as the development of another plot. As
a result, real estate becomes a more reliable source of financial stability for
investors.
Location,
infrastructure, Inflation, demand, and Land rates
are few reasons that might cause a property’s value to appreciate.
1.
Location
People will desire to live near their places of work,
according to the demand and supply aspect. Residential locations near places of
work have a strong demand among the working class in urban regions, which
drives up the price of residential units.
The middle and lower classes find proximity to work,
as well as available amenities such as hospitals and schools, and living in low-cost
locations, particularly appealing.
Read: Why
location is important factor when buying land in Kenya.
2.
Infrastructure Development
The availability of amenities is what attracts and
attracts potential purchasers to a location. If new infrastructure, such as
hospitals and schools, or other new real
estate market drivers, such as malls, increased public
transit services, are accessible in a given location, people will buy houses
for personal use. If the developments, which can take up to 10 years, are
evident, the price of land in these locations will continue to rise.
This also explains why serviced plots with water,
electricity, and other facilities are more expensive than standard plots. Their
presence has an impact on the area’s livability.
Developers should be aware of upcoming commercial and
government developments in the region, as these could have an impact on land
values.
3.
Supply and demand
Supply and demand play a big role in real
estate market, as we’ve seen recently. Simply defined, property values
rise when housing supply falls, creating an inventory shortage.
Property prices rise when demand exceeds supply in a
real estate market. This is due to population expansion outpacing supply,
raising the cost of property ownership.
4.
Land Rates
Interest
rates have a significant impact on real estate markets,
as changes can significantly affect a person’s ability to acquire a home. Low
mortgage interest rates result in an excess of money in circulation, which can
boost home ownership rates as loans become more affordable High demand will result in rising property values in a
free market driven by demand and supply. Consumers’ ability to support home
prices is highly dependent on major elements such as unemployment, and income
growth, therefore the general economy has a substantial impact on the real
estate market.
Also read: Land Owners Guide To
Land Rates And Land Rent Payment In Kenya.
5.
General inflation
Inflation raises the cost of building materials such
as cement, steel, and skilled labor, increasing the cost of construction
projects. This raises the cost of real estate. If the property’s nominal value
does not rise by two to three percent per year, the homeowner is losing money
in real terms. This is because inflation is increasing while property values
are not. Developers account for increased expenditures owing to inflation and
pass the final cost on to the property buyer.
6.
Network externalities
When an area becomes famous among locals, it becomes a
center for a variety of social activities. Schools, restaurants, shopping
malls, and other businesses begin to open in the region. Many people’s
lifestyles are suited to this, therefore houses in this residential market
begin to trade at a premium. The more established a location becomes, the more
people desire to live there, making the prices to increase.
Bottom
Line
There are so many reasons that can make a real estate
increase in value. To get an evaluation of the property value, you must
first understand the real estate market. With this in mind, engaging the
services of an agent or a property agency that can provide a professional
valuation is the best approach to determine the value of your property. Working
with a real estate
agent as a buyer will go a long way toward ensuring
that your property worth will increase. This is due to the fact that real
estate agents are knowledgeable with the industry and are aware of potential
trends.
See also:
1. 8 Ways to increase the value of a home when preparing to sell.