[ecis2016.org] We examine the impact of the immediate neighbourhood on property prices in an area
A neighbourhood is a community, where people spend a major part of their life. Be it your child’s growth or family’s safety, this community plays a big role in the liveability of the area, in many ways. In fact, the neighbourhood also impacts your property value significantly. Location is one of the key features that can cause appreciation or depreciation in property prices. Factors outside of the house that affect its value are known as ‘external obsolescence’. While these factors are beyond your control, it is important to know how they actually impact the home value.
You are reading: How does a neighbourhood impact property prices?
Impact of immediate neighbours on property prices
While the property’s value depends on the overall structure of the home, structures standing beside it can also alter its price. For example, if there is an empty plot near the property, it may be used as a dumping site by the neighbours, causing unbearable stench. It could also be a breeding ground for various diseases. If the home is unoccupied, it could invite anti-social elements, as well as squatters which can be a nuisance for everyone. All of these things are taken into account, especially from the point of view of safety.
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Cost of last sold homes on property prices
Usually, property prices are set as per the value of the last sold home in the neighbourhood with a similar configuration. If a home, which is similar to yours, is sold for Rs 50 lakhs, it would be really difficult for you and your property agent to put a higher price tag, in the absence of anything that adds a premium to your property, such as additional parking space or proximity to parks or society gate or the main road. In such cases, be prepared to justify, as to why your home commands a higher property value whenever you meet with a prospective buyer.
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How liveability quotient affects property prices
If you are selling a family home, having good schools in vicinity can help in adding a premium to your home’s value. Similarly, availability of parks and recreational activities, boost the liveability for families with children. If there are senior citizens in the family, having medical facilities close by can actually create additional value for the prospective buyer.
Employment opportunities and its impact on property prices
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If your property is in close proximity to an employment hub, investors who want to earn regular monthly income through rentals, can be your prospective buyers. Such buyers may be willing to pay more than the market rate. However, the buyer may ask for certain structural changes, to suit the requirements of a paying-guest accommodation like construction of an additional washroom or extending the home to another floor. In such scenarios, it is imperative to inform the buyer about the authority-approved map and layout of the building.
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How safety and crime rate in a locality affects real estate prices
This is an important parameter that can alter the investment prospects of the neighbourhood where your property is located. A home inside a gated community is considered more secure than one which is on the main road. For properties located along the main road, the owner may not be able to leave the home unoccupied for a long time, as passers-by will know that the home is vacant, which may invite thieves. For those upgrading to a bigger home in a different locality, safety may be the paramount issue. That is why people prefer apartment societies which have security services, with all latest technologies and features.
FAQs
Can neighbourhoods lower a property’s value?
Yes, your neighbourhood can lower the property value. This is referred to as external obsolescence.
Can I sue a neighbour for decreasing my property value?
It would be really difficult for you to prove if your neighbour has violated any legal duties he owes to you that could have resulted in lower property prices.
How do crime rates affect property prices?
Homes in neighbourhoods that have high crime rates may find fewer takers and hence, the seller may be forced to reduce rates, to find buyers for the property. Conversely, a secure neighbourhood may help the owner to fetch a premium for his property.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
