The property value can be determined by several factors, especially external factors. When the demand for property increases (supply-demand), the property will be directly proportional to economic growth. Conversely, when the economic condition decreases, the price of the property will ‘collapse’ first. Well, to know the prospects of the property, you have to look at the trend in interest rates. When the bank interest rate is low, the property will be stable and in good condition because mortgages will be more attractive to consumers.
To assess property precisely and accurately, at least there should be some things that you must value. The first is the size of land (if the property is in the form of land). You have to know the land size, and multiply it by the current market value. Well, to know the market price of the property, you need do conduct a survey or ask property agents who know the condition of the property market in detail.
Building size and quality
How a property assessed is to measure the size of a building and multiply it by the per-meter price of the building. Then subtract it with the depreciation, which is 5 percent for each year. For example, the buildings sold is four years old, then the total depreciation deductions is 20 percent, so that the building value is now 80 percent.
Premium value will cause the price of a property to be higher than other properties despite having the same quality and size. For example, there are two shophouses belonging to Mr. A (an ordinary person). Mr. A ‘s shop is next to Miss S (a famous artist / singer)’s. Both are sold. In this case, Miss S’s shop price will certainly have a higher premium value than Mr. A’s.
Another example is that there are two shophouses. The first shophouse is located in a outskirt, while the shop B is located in the campus area. Shophouse B’s premium value will definitely be higher than shop A since B has a much greater potential to achieve many advantages.
The second example is real evidence that property a strategic location is likely to have a higher premium value. It also shows that location is very important and even become the most important point for a business of buying and selling property.
Image credit: mchurchbuilding.co.uk