Literally Growing Your Money: A Quick Guide on Property Appreciation

When people talk about big investments, the first thing that comes to anyone’s mind is either a car or a house. And if you surveyed your friends, most of them probably bought their own ride before they got their own place, which isn’t a bad choice per se. Who wouldn’t want the freedom of driving somewhere instead of commuting there?

Here’s the caveat about cars, though: the moment you drive them off the dealer’s lot, they’ve already lost 11% of their value. And they’ll continue shedding value the longer you own them.

Property, on the other hand, is proven to steadily appreciate in value despite having higher upfront costs.

Here’s why:

Supply and Demand 101

Like any commodity, cars and homes are subject to the law of supply and demand. Unlike cars, however, you can’t just manufacture more homes if there’s a shortage because the land they stand on is a finite resource. Since there are always more home buyers than there are available homes on the market, their value naturally appreciate.

Some Things to Consider

While supply and demand strongly favors home appreciation, there are also other factors that affect how well your property accumulates value over the years. Here are some of them:

▪Location: There’s one saying in real estate that will always ring true: “Location, Location, Location.” That is, if your home is located in a safe neighborhood that’s near schools, business centers, transportation routes, and other amenities, its value will appreciate much faster than properties that are not. So along with price, consider also where a house is situated to get the best return on your investment.

▪Future Developments: Aside existing amenities, planned commercial developments can also help a property appreciate further. These include plans for new schools, malls, or roads that all make an area more desirable for buyers. If you invest in an up-and-coming location, you may see great property value appreciation over time.

▪Timing: Buying a property while a community is still being developed is more cost-effective than buying that same property when the community is already established and thriving. The earlier you buy, the longer your property has to appreciate in value, and the higher the premium you can command if you decide to sell.

▪Home Improvements: Renovations can also increase home value. That being said, different renovations contribute different levels of value appreciation. Pools, for example, are nice to have but their maintenance costs can negate any appreciation they generate. Kitchen upgrades, on the other hand, might be a better bet since they offer more practical utility for you or prospective buyers.

▪Maintenance: Over the years, wear and tear will depreciate a home’s value. To counter this, you must be diligent with upkeep so your property continues to be an asset instead of turning into a liability.

▪Historical Performance: Certain localities experience better property appreciation than others. Before buying a home, perform some due diligence first and research an area’s historical performance to see what returns you can expect.
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Aside from being a place where you can create life memories, a home can also be a great investment. We hope this buyer’s guide will help you vouch a home properly when you finally decide to make that big leap.

If you want to learn more about Nurtura Land & Home’s developments, check out Nurtura.ph!

Photo Credits

Photo 1 by tkoch via Pixabay. CC0 Public Domain.

Photo 2 from Alsons Properties.

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