Appreciation is a word that’s used a lot in the world of property investing, but what does it actually mean? When your property appreciates, this simply means that it has increased in value. The value can be seen in the equity you will have against your property in which to borrow as the banks recognise that you have a greater asset to sell.
Inflation
Inflation is an important factor when considering real estate appreciation. Inflation usually brings about a higher cost of living in addition to making your property more valuable, so in this sense inflation does not do the homeowner much good. However, if you are the homeowner and are living as an expat or have bought the property in a different country than where you are living, inflation can actually help your profit quite a bit if your costs are still the same as ever.
Scarcity
When your property appreciates due to scarcity, this means that it is more of a commodity than ever before. When there is an abundant amount of space in the area you own property, or a large number of similar properties available, your property won’t be able to sell for the best possible price. It’s all about supply and demand. If there’s no supply besides your property, it will be in demand and thus your property will appreciate.
Increased Quality
Properties don’t increase in quality on their own. As a caring homeowner, if you are constantly putting money and effort into sprucing up the home and upgrading details here and there, you could be responsible for making your own property appreciate. New paint jobs, room additions, landscaping, and attractive fencing are examples of things that you can do to appreciate the property without having to wait for the market to get better.
Neighbourhood Appeal
If your property is in a great existing neighbourhood, chances are that the neighbourhood will continue to improve and naturally appreciate the land and properties within it. Perhaps the neighbourhood will expand around your property, will add amenities or small businesses, renovate the local school, improve the public landscaping, etc. Your property will appreciate even faster if the neighbourhood around it is developing. If your property is the first in an up and coming neighbourhood, you can buy it for a low rate and then wait for it to appreciate once the neighbourhood is complete and more appealing than ever before.
Infrastructural improvements
Infrastructural changes don’t just appreciate your property or neighbourhood, but the entire town. Additions like new public transportation hubs can completely transform an area to a quiet and secluded suburb to a bustling extension of the city it’s connected to.
