Why does property tend to appreciate in value over time?

Increasing house pricesFor most people, a home is undoubtedly the biggest investment of a lifetime. Typically, but not always, the value of a house rises over time due to many reasons including:
• inflation
• capital investment
• mortgage rates
• supply and demand
• proximity to schools, shopping, parks and other attractions
• population changes
• infrastructure improvements
• crime levels; and
• desirability of an area.

An understanding of why property values go up or down can help you make sound real estate investment decisions. Here’s a couple of key things to keep in mind when looking to buy a new property.

Basic Demand and Supply
In 2013 Melbourne enjoyed a rise in demand for property that led to a general increase in prices. Not everywhere, mind you. Overall, house prices rose by 1.4 percent in December 2013. With a 2.2 percent spike in Melbourne, according to the RP Data-Rismark home value index. The constantly rising need for housing in Melbourne is based on shifts in population. Rise in demand is supported by other positive indicators, including consumer sentiment, population growth, clearance rates, interest rates, and number of sales.

The Melbourne property market has registered remarkable growth as young buyers seem to be eyeing more affordable smaller units and suburbs. A dwelling in the middle and outer suburbs of Melbourne is expected to cost less than the median value of $563,000. Other homeowners are selling their family homes for good prices and right sizing (shifting to a smaller home at a lower price that is more suited to their needs) and using the cash leftover from the two transactions to fund their lifestyle.

Mortgage Rates
The level of interest rates can affect the demand for real estate. Falling mortgage rates tend to lead to greater demand for property and faster increases in property prices. With an increase in mortgage rates, the demand for property tends to come down and vice versa. Currently, Australia is enjoying very low interest rates which is making property investment an attractive and more affordable option for many people.

Population Growth
Population growth will also affect the availability of homes for buyers. Melbourne and Victoria is growing by thousands of people each month. The increased demand for property often leads to higher prices. Improved housing affordability and low interest rates have released significant pent-up buyer demand built up over recent years, with an increasing number of looking to buy now rather than later.

Location location
The location of a house is one reason that can significantly affect its value. The proximity to schools, shopping centers, parks, colleges and cultural facilities can fuel demand for such a property, thus causing its value to rise.

Our next development in Mooroolbark called Paperbark Place ticks many of the boxes for a solid property investment. It is well located close to local shops, Mooroolbark train station, parks, pool, Eastlink, hospitals, the Yarra Valley and much more. And the local police station is also within 200 metres of the address, boosting a sense of safety and security.

The development offers a range of housing types from single storey two bedroom units to double storey three bedroom homes. Find out more about Paperbark Place in Mooroolbark and see if this may be the next property for you.

Or share below what other factors you think affect property prices.


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