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How Are Homes Valued?

Over the past two years, in particular, property valuations have skyrocketed.

With Hackney estate agents finding a current average asking price of £718,000, it is vital to know why prices are set the way they are, to set an appropriate budget and maximise the value of a home arriving on the market.

Ultimately, as property is not only sold to live in but traded as an asset in its own right, its price is primarily determined by market conditions in the area.

In other words, the primary factors that will determine the value of a home are its historic value, and the price of similar-sized property in the local areas sold for.

The most valuable part of any property to an investor (as opposed to a homeowner) is not so much the property building itself but what it is sat on top of.

Land is exceptionally valuable and when you buy a house, you are in practice buying the land and anything on it. This makes space a premium and making the most of it can increase the value of a home relative to others in the same market.

This is also why the common estate agent maxim of “location, location, location” rings true. Homes with high market value have it because they provide a shorter commute to a city centre or ready access to nearby shops and supermarkets.

The property does add some value, but the focus is on the fundamental systems in a house. This includes ensuring that the plumbing, wiring, appliances, and rooftop are all in good order.

This is the reason why some older buildings depreciate so much in value; the dated core systems, lack of double glazing or expensive to replace roof shingles may increase the cost of living there in the long run.