The valuation of a residential property can depend on many factors linked to the land and surrounding area of the property. Pakistan currently faces a housing shortfall of 10 million units. This means that the demand for housing is already high and rising every year by 300 thousand units due to an increase in population and rural to urban migrations. Homes in a developed and planned residential area will have seven to eight times the value of a home in an unplanned area. Planned areas have been developed in line with urban planning best practices and regulatory approvals of relative authorities. This means that several key infrastructural and municipal requirements are available in planned areas, making the residents of such areas enjoy a comfortable and sustainable lifestyle. However, other factors can also impact the value of a home. Continue reading to understand the multiple factors which enhance a home’s value in Pakistan.
Factors that Affect a Home’s Value
The issue of an accurate and consistent property valuation has plagued buyers and sellers of real estate for generations in Pakistan. Buying and selling of homes can have a high sentimental value for the seller or purchaser. However, this does not determine the actual value of the asset. Many sellers would like to believe their homes are more valuable than they are, while buyers would like to buy for much less than what the seller demands. While some lay their trust in real estate agents or brokers, others believe in comparing property valuations to similar properties in the area. No matter what the approach is taken, a property’s value can increase or decrease on many factors such as the size of the house, the floor plan, number of bedrooms, style of the home, the availability of right amenities, car parking spaces, front elevation views, and most importantly, location.
Size of the House
House size is probably the most important consideration for new residential real estate buyers, whereas sellers also gauge the utility of their assets based on property size. However, with the increasing scarcity of land in urban areas, property prices have risen significantly in the previous years to levels where middle-income-class families cannot afford to buy larger homes. Also, people are generally developing a taste for smaller homes as they are easier to maintain, and their energy footprint is smaller. Considering the extremely high demand for housing in Pakistan, a good strategy can also be to construct smaller homes to accommodate more units in a single parcel of land. Nonetheless, the size of a home remains an important consideration while valuing a property in Pakistan. Homes with extra land converted into a garden or different car parking spaces offer greater utility and, thus, a greater price.
The floor plan of a house is similar to the layout plan of a building. It is the effective utilisation of space in a certain house for specific purposes. A house’s floor plan can make a massive difference in the value of a property. For example, a 1000 sq. ft. home can have five bedrooms or two bedrooms. This will impact the buyer’s decision as, depending on family size, a house may or may not be adequate for use. Homes with smart floor plans that make the best use of all the available space will have a higher value in the market as the utility they offer is greater. Sellers often consider the floor plan the essential part of selling a house, making the home an attractive option. Homes with an open floor plan are considered more desirable, while those fitted with granite countertops and stainless-steel appliances are generally less desirable.
Style of the House
As new architectural technologies and innovations incorporate sustainability and efficiency in home design, older houses stagnate in value with time. With the new market being entered by teenagers and those who understand the importance of design in mitigating several challenges associated with energy use in homes, traditional architecture is losing its touch. Homes in Pakistan are starting to take inspiration from various designs being implemented in the world today. In terms of value, a newer, more contemporary house is higher in value and expected to sell faster. This gives a massive boost to the liquidity aspect of real estate and is a crucial deciding factor for many. Some people will also overlook the overall utility if they do not like the design well enough.
If a house is considered worth living in, it depends largely on the quality and availability of several amenities. Besides fixtures and fittings, several other amenities are now desirable in a house, such as patios, wooden floors, and fireplaces. Although not necessities, these amenities add to the value by enhancing the owner’s quality of life. An adequate garage is also a plus in a bustling metropolis, as parking in open spaces and outside homes are not considered safe. A garage also protects the car from natural hazards and extreme weather conditions. The impact of such amenities on the house values can therefore not be ignored. Having a house with more amenities will ensure that buyers pay a premium to gain that comfort.
Probably the most critical factor for determining the value of a house is its location. It is not difficult to understand why that is the case. The location of a house will determine what nearby facilities are available to the residents. Issues like the weather and availability of natural sunlight are also linked to the location of a house. Not every area will have the same quality of municipal services available to them. In contrast, the ratio of crimes in a particular area will contribute significantly towards the desirability of that locality. Another important aspect is the pace of nearby developments. For example, suppose a residential area is situated near infrastructural development projects and public offices. In that case, the utility of that location will be greater than those near the outskirts of a city.
The demand for housing in Pakistan is rising with every passing year; however, many people are becoming unable to afford homes in the residential market. The issue of an accurate and consistent property valuation system has plagued Pakistan’s real estate market. Valuation of residential property can depend on many factors linked to land and the surrounding areas. However, there are certain factors such as the size of the house, floor plan, number of bedrooms, style of the house, availability of right amenities, car parking spaces, and most importantly, the location, which can help a buyer or seller determine a property’s value.