A first-time buyer might believe that only the house itself will lead to an increase in property value. Figuring out what can happen to your home price can be scary when you think about the impact the economy can have on it. In reality, the physical aspects of a house tend to depreciate as time goes by, while the land where it’s located usually appreciates. As an investor, you have to understand property appreciation and what makes property prices appreciate to make better choices.

But you might be asking yourself: what exactly is appreciation and how does it work? In real estate, the term appreciation means the increase in the value of a property over time. So in simple terms, land appreciates because it’s limited in supply, after all, the earth is finite. Consequently, as the population increases, so does the demand for land, which increases its prices over time. 

This increase can happen for numerous reasons, and in this post, we will break down the main factors that cause property price appreciation. Things like the location of the property, size, age, and condition all can affect the property’s value.

Infrastructure development

Infrastructure development is one of the key roles in price appreciation. Think about what can drive more population into a certain area: roads, transports, new connectivities. These things cause new projects to be launched in the region, and investors can get the most out of their real estate investments.

Local development

Local development is another main cause of property appreciation. The demand for houses in a neighborhood is impacted by its own social, cultural, and demographic characteristics. People want to live in a neighborhood that supports growth, has security surveillance, protects green cover, and has facilities around.

Amenities

Amenities also can create a huge price difference in a property. Imagine a place without public amenities such as parks, schools, shopping malls, and post offices. Those are places that are available to everyone in the area and are super important to have closer to a house. Property-specific amenities like parking lots, swimming pools, or hot tubs can increase your property price too. An investor that continues to upgrade their property is on the right track to make it appreciate even more in value.

Economic situation

The country’s economic situation is also a key role when talking about property appreciation. You have to remember that if the inflation rate is high the value of money will decrease, forcing a builder to spend more money on items like permits, labor, construction material, etc.

When investing in real estate, one of the main goals is to get a positive return when you decide to sell the property in the future. For that to be successful, do your research as to where you should own property, calculate your property’s appreciation and think about what renovations you could add to your house that could increase your value the most. Owning a property is one of the most profitable investments you can do.