The Factors That Affect Your Property Value

by : P Green

Everyone who buys a house wants to be sure of one thing in the years to come: that the property value will increase.

For many people, their main home is being seen as much as an investment as it is somewhere for the family to live.

And that's not surprising, given the huge house price increases we have seen over the last number of years. Even with a predicted slow down in house prices for 2008, property continues to be a good investment.

External factors can have a significant effect on the price your house will reach.

New research from the Halifax has shown that living near an empty property has a financial effect. More than one in four of us have lived in a street with an empty home at some point. And many of these feel it had a detrimental effect.

22 per cent of people in the survey thought an empty house has a negative effect on property value. A similar number felt an empty home would reduce their enjoyment of the street, showing that vacant property can also have a psychological effect.

A quarter of people believed that the empty house would have a negative impact on a potential buyer's perception of the area. Perception is of course an important factor in determining property value.

Indeed, the Halifax research reveals that house prices are 17 per cent lower in areas with the highest proportion of empty houses.

It compared the average property value in 15 local authority areas with a high level of empty homes and found they were below the regional average. Houses were typically £30,000 cheaper than other nearby areas.

The bank believes that rising property prices will force a rejuvenation of empty homes across the UK.

Another factor to consider before you buy a house, especially if you are getting onto the property ladder for the first time, is the availability of good schools in the catchment area.

An older survey by the Royal Institute of Chartered Surveyors (RICS) revealed that we are willing to pay up to £16,000 more to buy a house that's near a successful school.

It found that smart buyers read up on Ofsted reports before looking at houses. That effect can of course work the other way, with "failing" schools having a small effect on the property value of local houses (although the effect is diluted by other better schools being in the catchment area).

So those are two important external factors which could affect you. But there are many things that you can do to your home, to squeeze the most property value out.

The thing that will have the most impact is to increase the floor space in your house. You can do this either by adding new space, such as getting a conservatory or an extension built.

You can also renovate dead space. This means converting your loft or cellar into a proper room, or even turning an unused under stairs cupboard into an extra bathroom.

The typical return on investment for a project like this is significant.

You will also see a good return from updating the two major rooms in the house: the kitchen and bathroom. Improvements to these rooms virtually always add value - who doesn't want a house with a nice new kitchen?

Good DIY can also significantly affect property value. Making a house looking clean, clutter free and painted in neutral colours will all raise its worth in the eyes of potential buyers. And keeping it that way ensures you have less work to do when it's time to sell.