Factors That Might Affect The Value of a House

Nowadays, buying property has become very common in Malaysia as property could be a good investment in the long run if the right property is chosen. A right property could gain income for the landlord without bringing too much trouble, and vice versa, a bad property could result in loss and problems. For instance, a loss would be gained if a particular property is rented out to a tenant who refuses to pay rent on time. Therefore, a good property is hard to identify, as different people have a different mindsets and opinions regarding the same property.

As a property investor, the value of a property is very significant since it will affect the transacted price of the property and either directly or indirectly affect the income and outcome to the landlord. The income could be the high rental rates or when the disposal price is higher than the acquisition price. The outcome could be if this investment is a good investment as the tenant pays on time. Therefore, this article will be discussed about the factors that could affect the value of a house.

There are various kinds of factors that could affect the value of a property. But firstly, the location of the property is very crucial as it could affect the potential buyer to change his/her mind from intending to purchase to refusing to purchase. For instance, if comparing a property near KLCC and property in the countryside, both properties might attract different kinds and levels of people to buy the property as they have different decision-making styles. Some people might like to live at a slow pace at the countryside which would never get from the location in big city with a quick pace like Kuala Lumpur. However, majority of the people might be thinking, a city will be more convenience to live as all facilities are fully equipped. For example, the public transport like LRT, MRT and bus which makes people easy to access to every part in Kuala Lumpur. Also, Kuala Lumpur has a higher job opportunity as the rapid development and advanced improvement. In conclusion, the property in big city might have a higher value or prices as the demand in city is high.

Another factor which indirectly related to the location of the property is the factor of accessibility. A property that is easy to access could attract more potential buyers as people do not need to travel so far to visit to other places. As an example, we rather choose to purchase a shop lot which is facing the main road and easy to access to any of the highways that people often access to, than a shop near developed in an unknown place which only have limited people have information to. Following that, the surroundings of the property are also a key factor to increase, decrease or maintain the value of a property. For instance, formerly a property is surrounded by nature which means it is surrounded by trees without too much noise or pollution. However, the land has then been developed and turned into the industrial land which full of factories. This action results the residents in that area been affected by the noise, air, and water pollution caused by the factories in long-term. Therefore, people will now plan to move out from that area as their health were affected by the pollution. Hence, the value of the properties in that areas will then drop.

Furthermore, the tenure of the land will also affect the value of the property. For example, for a freehold property and a leasehold property with 99 years of tenure, the value of the freehold property might maintain or increase but the leasehold property might decrease as the time goes by and the date that needs to return the land to the government becomes nearer. People might afraid if their land was unable to be renew, they have no place to stay. However, a landowner with freehold property does not have this kind of trouble as they own the land forever if no forceable land acquire is gazetted by the government. Moreover, the government laws, policies and regulations are also closely bound up to the changes of the value of a property. For instance, the announcement of Budget 2021 regarding the stamp duty exemption for all first-time home buyers on both the instrument of transfer and loan agreement which transacted price is lower than RM500,000. This scenario could indirectly encourage people to purchase property and so, the demand increase will increase the value of the property if the supply in the market is limited.