Ever wonder what is responsible for housing prices?
When it comes to costing a property, a number of factors come into play. Of course we all want to snag the best bargain when purchasing anything but we also have to be realistic especially when it comes to big budget items like real estate.
What then determines how much a potential buyer will pay for a property? Not sure we have all the answers but we have highlighted some of them below:
Location
You know what they say about the 3 three most important “L”s of real estate being location, location and location. It is undeniable that location is one of the most important factors that will affect the price of a property. For instance in Nigeria, houses are generally more expensive in big cities like Lagos and Port Harcourt than other state capitals that are less populated. This could be as a result of high commercial activities occurring in these cities thereby bringing in more people, which will in effect increase the housing needs for these cities.
Size
Are you looking to buy a mansion somewhere in Banana Island, Lagos or a Two bedroom flat in Ilupeju? In addition to location, size also plays an important role in determining real estate prices. How big or small the property is will be used to determine its worth.
Market Forces
Demand and supply plays a huge part in determining property prices. In a market like Lagos, there seems to be a constant demand for housing which in effect is why there is continuous development happening in real estate. There are a number of planned cities in areas like Epe and others around the Lekki Lagoon that will be developed over the next couple of years and they can be tied back to the demand due to the fact that mainstream Lagos does not have any immense expanse of land that can be developed. Also, planned development like an airport and free trade zone are responsible for fuelling the demand in said areas.
Development
How well developed an area is will also affect the real estate prices there. Are there functioning basic infrastructure? How good are the roads leading to the property? How safe is the environment? For instance, a residential property close to an industrial area may not command a very high price due to the perils associated with residing close to manufacturing properties. We would also expect properties in urban areas due to the difference in infrastructure.
What else do you think affects the price of a property? We would love to hear your thoughts.
