Price is one of the most important factor that buyers consider before purchasing a property or any other product in the market.
Whether the product in question is inexpensive or expensive, price is always a very decisive component. Most property buyers according to research have revealed that these people have only buy property once in their lifetime.
Imaging buying a property for the first time and possibly your last time in your life buying such an expensive property. There is high probability that you will try your best to negotiate as much as you can to get the best deal.
This points the fact that price plays pivotal role when acquiring real estate property. Here is some of the
- Government regulations
Government regulations like zoning restrictions tend to affect negatively the pricing of properties. Properties where government has restricted strictly specific activities then to be costly to amend the current status. This cost is often transferred to the final buyer of the property, which is often tend to be expensive in the long run.
- Acquisition cost of land
Land is one of the items that cannot be manufactured or adjusted. It is a scarcity resource that population keep exerting pressure on.
Due to increase in population and its high demand for housing, the land prices keep rising every other time.
- Infrastructure development
Infrastructural development like roads, electricity, water connection, airports, railways connection make prices of land to rise. This is why most land developers strategically sell their plots in such areas because of the great potential of customers.
- Cost of materials and supplies
Development of real estate properties depend on other industries like cement, paints, wood, transport sector. Any negative fluctuations from these sectors will make prices of property to go high.
This is a variable in real estate that you have little control over since it is more influenced by the inflation. It is good to be aware of it as it affects the general pricing of properties.
- Economic slowdown
Real estate properties tend to mimic the general performance of economy. When the economy is performing well the real estate index is doing good as well and prices tend to be high during that time.
This because, when the economy is booming, commercial properties tend to have high occupancy rate create by high demand from commercial businesses.
As an investor you need to have economic data so that you don’t buy the property at a premium price. You should be considering buying properties at a discounted price, at end of recession.
In conclusion, real estate properties tend to have varying prices depending on many factors which include government policies, cost of land, cost of materials for building and economic performance.
As a real estate developer, you need to ensure that your correctly price your properties so as to attract and close many deals.
As a buyer, you need to be aware of factors affecting prices and do comparable analysis so that you don’t pay more than what people in your neighbourhood are paying.