At the core of property value lies the willingness of buyers to pay for it, which is influenced by a range of factors. In this context, we will be exploring the enduring and fundamental criteria that impact property prices. Location remains a crucial factor that influences property prices in London. The most expensive borough in the city include Kensington, Chelsea and Westminster. Whether you are selling or buying a property, it is valuable to consider these factors when assessing its value. By keeping these criteria in mind, you can gain a deeper understanding of the nuances that influence property prices.
The property market operates under the fundamental principle of supply and demand. If the number of properties for sale exceeds the number of potential buyers, this oversupply drives down prices. Conversely, if there are more buyers than available properties, this increased demand leads to higher prices.
The housing market is also influenced by policies and regulations. Changes to interest rates, for instance, play a critical role. Lower interest rates mean that borrowing costs for purchasing a property are reduced, making it more affordable for buyers to secure a mortgage. This increased affordability can lead to higher demand and consequently drive prices up.
Similarly, policies such as smaller deposit requirements and stamp duty holidays can also impact the housing market. The state of the market determines how quickly a property will sell. In a seller’s market where demand exceeds supply, properties tend to sell quickly. On the other hand, in a buyer’s market, where there is an oversupply of properties, homes tend to take longer to sell.
Let’s have a closer look at the key factors that impact London’s property prices:
- Proximity to transport: Properties located near good transportation links such as train stations, bus routes or underground stations tend to be more valuable.
- Community feel: Properties located in areas with a strong sense of community and a welcoming atmosphere may be more desirable and command a higher price.
- Amenities: Properties located near shops, restaurants, and other amenities may be more desirable and command higher prices.
- Local schools: Properties located within the catchment areas of high-performing schools may be in higher demand.
- Crime rates: Properties in areas with low crime rates may be more desirable and therefore command higher prices.
- Development plans: Property prices can be impacted by development plans in the area, such as new commercial developments, residential projects or infrastructure improvements.
- Noise levels: Properties located in quiet areas or away from busy roads or train tracks may be more valuable.
- Leasehold vs freehold: The tenure of a property can impact its value, with freehold properties generally more valuable than leasehold properties.
- Property Size: Larger properties tend to cost more than smaller ones.
- Condition and age of property: Well-maintained properties and those with modern fittings and fixtures can attract higher prices. Older properties may have historic charm, but may require more maintenance and upgrades, while newer properties may come with modern conveniences.
- Features: Outdoor space, view, parking, the number of bedrooms and bathrooms and their spaciousness play a role in the value. The availability of garages, office space, fireplaces, swimming pools, and energy-efficient heating systems also influence property prices.
- Planning and building regulations: Any illegal extensions or home improvements have an impact on property value. Nobody wants to inherit ongoing legal issues.
- Upgrades: Kitchen extensions, upgraded fittings, underfloor heating, double-glazing, bi-fold doors, new plumbing, updated electrics, dimmable light fixtures, smart technology, and loft conversions have the potential to increase home sales. Limited proportions of a property with the wrong or unnecessary improvements can also put off buyers.
- Potential for renovation: The chance to increase the floor space through extensions and loft conversions can add significant value to a home. However, it’s important to note that if a property is located in a conservation area or is a listed building, planning permission may be required before making any alterations.
- Energy efficiency: Properties with energy-efficient features such as double-glazed windows, solar panels, or insulation may be more valuable in the long run. For landlords or future landlords it is an important factor because the government has proposed that all rental properties will need an EPC rating of ‘C’ or above by 2028.
- Architectural style: Properties with unique or historic architecture may attract a premium price.
- Historical significance: Properties with a rich history or cultural significance may attract a premium price.
External and economic factors
- Supply and demand: Property prices may be influenced by supply and demand in a particular area. High demand and low supply can lead to higher prices.
- Economic factors: Economic conditions, such as interest rates and employment rates, can impact property prices.
In conclusion, there are numerous factors that determine the value of a property, and it’s essential to take them all into account to make an informed decision. By carefully considering these criteria, you can gain a more comprehensive understanding of a property’s worth.
If you’re looking to sell or buy property in London, we are here to help. Please don’t hesitate to contact us, and we will be happy to spend time understanding your project, to advise and to assist you in any way we can.