What influences a property’s value?

1. Location

Is the property close to the city centre? Is it in a sought-after waterfront location? Is it close to public transport, shops, schools and restaurants? People generally want to live close to where they work and where they enjoy their free time, so properties in these areas will be more expensive.

Two homes just streets apart can differ substantially in value if they’re simply located in different postcodes.

2. Supply and demand

If demand exceeds supply in a given market, property prices will increase. This is because there are more people in the market for a smaller number of properties and the competition to secure a home drives prices up.

If you own an apartment in an area that has seen the construction of a large number of new apartment buildings recently, then supply may outstrip demand. This could limit the growth in value of your apartment.

3. Interest rates

When the Reserve Bank changes monetary policy, this can affect the value of property. Low interest rates mean money is cheaper to borrow. This tends to drive up prices because people can stretch budgets further by borrowing more money.

If rates rise, borrowing gets more expensive. This can slow price growth and force borrowers to tighten their belts.

4. Economic outlook

The overall performance of the economy can also have an impact on the property market. If the economy is experiencing strong growth, employment and labour conditions, more Australians can afford to purchase a property, which leads to rising property values.

5. Property market performance

The performance of the real estate market in your local area can also affect how much your property is worth. If there’s little demand for houses in the neighbourhood and the properties listed are selling for well below the asking price, expect values to fall.

The overall performance of the property market matters too. If prices are rising across the board, this can only benefit homeowners, broadly speaking. But it is important to remember that Australia's property market is really a series of city and regional markets.

6. Population and demographics

The more people want to live in a particular suburb, the greater the demand for properties in that suburb. At the same time, the type of people living in the area will also influence property values. For example, if young families are the dominant demographic group in the area, multi-bedroom houses will be more sought-after than small apartments.

7. Property size and features

The features and overall size of a property also influence its value. A four-bedroom house is likely to fetch more than a two-bedroom house in the same area, while features such as extra bathrooms, garages, swimming pools and outdoor entertaining areas can all have an impact on property value.

8. Aesthetics

The street appeal of a property should never be underestimated. First impressions are very important in real estate, so the way a house looks from the outside can instantly add or subtract tens of thousands of dollars from its value.

9. Renovation potential

The potential for growth is important for both homebuyers and investors - the potential to add an extra bedroom or extra storey, the potential to increase the floorspace, or the potential to add a pool or outdoor patio.

If there’s scope for a buyer to improve and personalise a property through home renovation, the re-sale value of that property will increase.

10. Energy efficiency

A property made of high quality materials is likely to have a higher value, in part because this makes the property easier to heat and cool. Given the high price of electricity and gas bills, items like solar panels, insulation and double-glazed windows can add value and appeal.

When is the "right" time to buy?

You can't really time the market. There's never really a right or wrong time to buy property because ownership is a long journey (whether you're investing or buying a home to live in).

The right time to buy is when you're ready financially. But keeping an eye on market trends is very important. Knowing how the market is performing can help you judge your property's value more accurately. This helps you avoid overpaying.

How to find out the value of your home

If you’re looking to buy a home or sell your current one, you need an estimate on how much your property is worth.

While online tools can be useful, they won’t always give you an accurate quote. You can get a more accurate assessment from a real estate agent. A local agent will be happy to give your home a quick appraisal for free (that's how they get potential customers in).

You can ask multiple agents to value your property.

Written by

Richard Whitten

Senior Money Editor

Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 687 Finder guides across topics including:

• Home loans
• Credit cards
• Personal finance
• Money-saving tips