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Buying? Value is more than just price.

June 22, 2010

As reported in the latest REIV publication ‘The Estate Agent’, traditionally real estate buyers and sellers considered price to be the most important feature of a property. LaTrobe University has recently researched this opinion, and found that there are other factors which are also critical to long term value.

The supply side (ie the availability of housing) has been one of the main drivers of actual and potential future demand, rather than simply the price of property as an isolated factor.

In Melbourne, continuous population growth and land availability have contributed to the increased in demand for property. It is this imbalance between population and supply that influences the price of property.

Consumer psychology looks at buyer characteristics, preferences and demographics constructs sets of ‘consumer subjective values’ that influence the perception of that all important ‘good buy’.

Paul Vella says there are 6 unique ways that contribute to a buyer’s perception of ‘value’.

Functionality: Convenient layout, bedroom size, space, maintenance and structural aspects.

Community: How close are the buyers to their friends, feeling secure and knowledgeable about the area. Is it in the social area they feel matches their demographic?

Aesthetics: Is it new, does it appeal to their design style? Presentation comes in here.

Status: this relates to the proximity to city, other noteworthy locations and house size.

Wealth: Is this area affordable? What does my purchase in this area say about my status?

Innovation and information: Are the design features of the property or development green and eco-friendly? Is it built with approval from the council?

Don’t be afraid to push the limit if you are buying a property in a ‘blue chip’ area, close to quality public transport, amenities, schools and similar infrastructure. If you are going to live in this residence, holding onto such a property will generally bode well for you.

*Stockdale and Leggo Elsternwick has gathered this information to provide an interesting document for readers and subscribers. Information contained herein is gathered from a range of sources including but not limited to; local Victorian press both virtual and hardcopy, Valuer General Information & Agents own investigations. All efforts are made to verify the information provided. The information is not to be relied upon or used in dealings with third parties and people should make their own investigations regarding their own property or personal circumstances. Opinions and observations offered should not be treated as fact.

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