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Housing Demand The demand for housing represents the quantity of properties that homebuyers are willing and able to buy at a given price in a given time period. Price For the majority of properties, the price will affect demand. Price is determined by a negotiation process between buyer and seller. The market price depends on many factors:- 1. Desirability and affluence of the local neighbourhood. Factors affecting desirability of the area include:- • Unemployment rates and employment opportunities. • Local crime statistics and the reputation of an area. • The accessibility of good local shopping and transport networks. • The quality of local schools and hospitals and other civic amenities such as parks, leisure centres, libraries and other sites of public interest. A local state school with an excellent GCSE and A level exam record can add several thousand pounds to average house prices in an area. According to research published in the Economic Journal in October 2004, some wealthier parents in the UK are willing to spend up to a 30% premium on houses in the catchment areas of very good schools. 2. Semi-detached v Detached properties A study by economists at the Nationwide Building Society found that if a semi-detached property was sold, and a detached property the same size, with all the same features, in the same area was bought, it could cost more than 10% more. 3. Number of bedrooms A rise in the number of bedrooms can add value to a property - but the “value added” is limited by the total floor space available. Extensions to a property (i.e. from loft conversions and the construction of conservatories) tend have a greater impact on the market value than creating more bedrooms from the same floor space. 4. Convenience of a second bathroom Prices tend to be higher for properties with more bathrooms. For two identical properties in the same street, an extra bathroom could add as much as 10% to the price. However, the more bedrooms a property has, the greater the value that is contributed by a second bathroom. For example, in a two-bedroom house a second bathroom would be less desirable than one in a five-bedroom house. 5. Home improvements Those adding most value to a property in enlarging a garage and adding central heating. Adding a double garage, rather than a single one, more than doubles the contribution it makes to the value of a property. The land available for a double garage is often at a premium - there is a trend towards two or three car family units. And, many households make use of the extra garage space to add extra utilities such as extra freezer units. Again this will vary between different regions. For example, because of the shortage of space and the price of land a garage will add more to a property in London and the South East than one in Scotland. Be aware homeowners often exaggerate the effect that improvements can have on a property’s market value! Equally, the failure to do some basic DIY before putting a property on the market (ie for sale) can have a negative effect on the price that a would-be buyer is prepared to offer for a property. 6. New homes Buyers are willing to pay a premium for the benefit of living in a new home. One reason is that new properties have warranties that cover some of the repair and maintenance costs associated with newly constructed properties, and they tend also to incorporate modern building technology. |