The real estate market is developing significantly, especially with economic growth, so understanding the factors that affect property prices has become a focus for many investors and those who want to buy or sell. Real estate prices vary from one area to another, and may even differ in the same area between one property and another, as a result of the interplay of many factors.

In this Article, we will explain the most important factors affecting property prices and the role of property valuation in the real estate market. 

What are the factors affecting the value of a real estate property?

•  Location: One of the most important factors that affect property prices is location. This is in terms of the property’s proximity to services, basic facilities, and means of transport. In addition, the type of area where citizens tend to buy quiet residential areas as opposed to commercial or industrial areas.

• Real estate condition: Despite the importance of location in determining the price of the property, the condition and appearance of the property is something we cannot overlook. This is in terms of property area, maintenance, infrastructure, finishes, utilities, plumbing and electrical systems, and many other property specifications. In addition to the age of the property. New or refurbished properties are often more expensive than older properties or those in need of maintenance.

• Supply and demand: The state of the real estate market itself is one of the most influential factors in determining prices, whether the market is in a state of recovery or stagnation. In periods of recovery, there is a high demand for property, often accompanied by a rise in prices as a result of active buying and selling, and increased investor and buyer confidence in the market. In a recession, demand decreases and buyers become more cautious, leading to stagnant or falling prices, especially if supply exceeds demand.

• Economic changes: The market is affected by the local and global economic situation. For example, high inflation rates or low purchasing power can lead to a decline in demand and therefore lower prices, while economic growth stimulates the market and raises prices.

• Government policies: They contribute to the movement of the real estate market, as state decisions can either stimulate the market or calm it down. Modifications in the tax system such as reducing or increasing property taxes lead to a change in the attitudes of investors and buyers. In addition, government projects or infrastructure development in some areas contribute significantly to increasing the attractiveness of those areas, which raises the value of real estate. 

From the above, it is clear that many factors affect property prices, from its location and quality of construction to the surrounding infrastructure and services, to market trends and government policies. Understanding these factors greatly helps to determine the real value of a property such as property prices in Riyadh. It contributes to making informed decisions, whether buying, selling, or investing.

What is the benefit of real estate valuation?

After reviewing the factors affecting property prices, real estate valuation is a necessary step to determine the real value of any property. It is a professional process that relies on a comprehensive analysis of a range of factors, such as the property’s location, its condition, comparative prices in the area, the economic situation, and the level of supply and demand.

Property valuation helps in providing a fair and objective market value, enabling the buyer to make a sound decision to buy without paying any excessive or inappropriate amounts, and helps the seller to price his property realistically in line with the market situation. Valuation is also an important tool for property investors, enabling them to measure the potential return on investment and assess the level of risk.

Real Estate valuation also contributes to real estate financing, as banks rely on it to determine the value of financing, reflecting the importance of this process in supporting financing decisions in a thoughtful and safe manner.

In conclusion, knowing the factors affecting property prices is important for investors and buyers in the real estate market. A property valuation contributes significantly to determining a fair and appropriate value. If you need a certified real estate valuer, contact Aain and get a real estate valuation service that will lead you to successful investment decisions.

Frequently Asked Questions: 

• When is the best time to buy a property?

The best time to buy a property can be determined by studying the state of the market well, mostly in cases of recession and low prices, where properties are at lower prices, which makes it the best time to buy. 

• What are the reasons for high property prices?

Real estate prices rise as a result of several factors, most notably increased demand against low supply, and improved infrastructure and services in some areas. The high cost of building materials and finishes, as well as the ease of access to mortgage finance, also contribute to the rise in prices. Government policies and national projects also increase the demand for certain areas, which increases their value. This is in addition to the impact of economic stability, which encourages investment in property as a safe way to save money.

• How do I know the valuation of a property? 

by choosing a real estate valuer accredited by the Saudi Authority of Accredited Valuers. The valuer will examine the property and determine the appropriate market value.