Article 2:  Factors that affect real property values

Whether you are purchasing Melbourne preperty to live in or for investment, OR you currently own a Melbourne property and you are contemplating selling or perhaps refurbishing, subdividing or redeveloping it, knowing the factors that affect real property values is essential and could save/make you a wheelbarrow load of money!

So what factors have an effect on Melbourne property values?

Locational Attributes

Location...Location...Location! You must have heard this one before so many times whenever the subject of property is brought up. Indeed, "location is king" as far as property values are concerned. A property's location in relation to amenities, communal facilities, public transport, etc. is what gives its location value. For example:

  Type of Property Location in relation to:
     
 • Residential property: schools/kindergartens, childcare, shopping, bus/tram services, railway station, parks, playgrounds, community amenities, freeway access, etc.
     
 • Commercial property: shops, bus/tram services, railway station, parking, restaurants, cafes, etc. 
     
 • Retail property: bus/tram services, railway station, main road exposure, carpark, adjoining retailers, demography of target market, size of surrounding catchment, inbound/outbound trafiic side of road, etc. 
     
 • Industrial property: proximity to main roads, freeway access, proximity to suppliers, seaport, airport, etc. 
     

Physical Attributes

The most obvious are the tangible attributes of the site, non-building improvements and building(s) on the site.

The Site

A property's site attributes such as its size, shape, frontage, depth, soil type, gradient, view and exposure can individually or collectively increase/decrease its value. Different types of property will be affected differently by each of these site attributes.

Non-Building Improvements

These include gardens/landscaping, retaining walls, paving, swimming pools, tennis courts, fencing and services for residential properties. Or could include car parking spaces, hardstand areas and security fencing for industrial propeties.

Building Improvements

A building's size, design (especially facade and layout), condition, quality, architecture, internal fitout, street appeal, amenities and other features can add to or detract from a property's value.

Economic Forces

A typical textbook explanation of this would refer to the relationship between supply and demand. The textbook would add that economic forces relate to the ability of the population to satisfy its wants, needs and demands through its purchasing power. Examples: employment, stock of vacant buildings, buildings under construction, occupancy rates, current market rents and construction costs. These textbook stuff, believe it or not pretty much reflect the real world in many ways.   

Government Forces

The legal climate at any given time may overshadow the natural market forces of supply and demand. This may influence values via (a) provision of public services such as transport, fire and police protection, and rubbish removal; or (b) building codes and zoning, with special mention to those that obstruct or support land use. For example, many government agencies will only lease an office building that achieves a set minimum energy efficiency star rating.

Other

Other factors that could have an impact on the value of your Melbourne property could include legal, psychological and environmental attributes, and social and environmental forces.

 

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