4 Major Factors Influencing the House Prices

What are the factors influencing house pricing

What factors influence the house prices? This is an extremely important question asked by home buyers. But, before going into the factors that affect the property price, it is of utmost importance to know the meaning of the house price. As the house is a property, so a house price or a property price is defined as the price that the property is transacted at between buyer and seller after the negotiation. The property price is directly dependent on property value and the property value is referred to as the worth of the property in the market made after the valuation of the property. It has been commonly found that the housing properties are transacted above or below house value.

So, what’s the major staggering factor behind the house transactions that take place? It is the differing perception of what the property in question is worth to the buyer and seller. No matter what, the buyer will always try to buy at the minimum cost and whereas the seller will try to reap the maximum profit by selling the house at highest cost.

Related: Factors affecting Land Value

Saying this, here is a quick breakdown of the factors influencing house prices:

1. Location & Neighborhood

We all are familiar with the saying, “Location, Location, Location”! A home is located in a physical location and surrounded by a neighborhood which is something that transforms to some key aspects thus affecting both- you and your lifestyle. However, location and neighborhood may sound similar but these two terms are greatly different from each other.

If a location is very close to commercial or market areas, then the house prices are higher as compared to counterparts in the residential areas. Some areas simply hold more value than the other areas. A house in a rural or less developed area will always cost less than those in the well developed or urban area. Also, a location with a great accessibility to highways, expressways, schools, shopping malls and local employment opportunities contributes to the added house value.

While a popular neighborhood is seen as a hub of prestigious schools, public transportation links with lower or negligible crime rates. A short distance to a school or a place of worship enhances the property value and stands to hold premium price.

2. Availability of Necessities and Amenities

There is a certain set of features and amenities that have high desirability or appeal as from a buyers perspective. If a house happens to have features such as modular kitchen, underground drainage system, intercom facility, it is going to command a pretty good price. Furthermore, infrastructure facilities like club house, kids play area, jogging track, swimming pool, gymnasium, covered parking lots, 100% power backup, library, yoga center, 24/7 security, etc. are provided within the township or community surely have a significant impact on the house prices.

Diversity in Southeast Asia

Nowadays, there are builders and developers that are contributing to making our planet green by facilitating most of the green amenities including, better indoor quality, rain water harvesting, soil conservation, solar electricity, energy efficient and sustainable construction. Such green residential projects reduce damaging impact on the earth’s environment whilst focusing on the utilization of renewable sources as much as possible. This is why green homes tend to have higher resale value as compared to ordinary ones.

3. Size and Layout

The larger the square foot of the house, the more expensive it can be. Also, the number of bedrooms largely influences a home’s value. So, a house with the several numbers of bedrooms is more likely to have high curb appeal as opposed to a villa with just one bedroom. While in some cases, an open plan design layout can be more appealing than a boxy space of the same size. Moreover, the house which is newly built or is in immaculate condition is always speculated to hold highest market price than the one that needs remodeling.

4. Affordability and Recent Nearby Transactions

The process of retaining a property after the costs have been incurred by the owner is referred to as affordability. To put more simply, it is described as the relationship between the house prices, interest rates and wages. So, if any of the given variables reaches its maximum level in a specific area, then the inhabitants start finding a better lifestyle elsewhere.


Comparable nearby properties or recently transacted house prices has long been used as a benchmark against your home potential price. But, don’t forget that similar apartment sold at a good price could have better facilities than the apartment at a low price or its reverse can also be true.

Final Thoughts

Economy, interest rates, government policies, local regulations, mortgage interest credit are few of the other factors that affect the house prices. The real estate market is highly unpredictable and much of it is based on the factors you can’t control. Be it planning or buying a new house or want to use your home equity for other expenses, it becomes vital to analyze the particular property and the associated market conditions so as to know how much the property is worth in the market over the course of time.

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