In times when Australians are opting for the inner-city experience over the idyllic life of the suburbia and choosing balconies instead of backyards, ‘Walkability’ has certainly become a prime criteria for selecting homes. Michael Yardney for the Property Update asserts that homes closer to amenities, transport and healthcare facilities will be among the more sought after.
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Inflation-adjusted home value is the true indicator of growth
While the nominal or non-inflation adjusted home value will give you a rough idea of growth, the true picture is only reflected once you take inflation into account and adjust home values against it. Cameron Kusher for The Property Observer says that this is the ‘Real’ home value- a significant insight for those investing in the property market.
For instance, prices over the capital cities showed a cumulative hike of 2.8% over the first quarter of 2013, yet in real terms, the growth should only be considered 2.4% (little below) as there was a hike in Consumer Price Index by 0.4% too.
Over the last 17 years, calculating upto the March 2013 quarter, home value has increased roughly 3.4 times whereas the real value has increased only 2.2 times. This then is the effect of inflation, something that cannot certainly be ignored. Kusher smartly illustrates the falls in home values across the capital cities (including both the cases in his argument: inflation-adjusted home values and the non-inflation adjusted ones).
Home value spurts in recent future will keep very close to inflation; may be a notch higher due to the low cash rate environment prevailing now.
You can read the full article here.
Do you know the difference between your real and nominal home value?
Smoking in the House Reduces Home Value
If you are a smoker, chances are you might end up significantly reducing the value of your property. I was glancing through a survey report by Pfizer Canada which revealed that smoking inside residential premises can shrink the resale price of homes by up to 29%. Pfizer Canada is a pharmaceutical organization whose products encourage users to quit smoking. The survey commenced on 31st January and concluded on 6th February.
Astonishing facts from the study:
- As many as 401 participants in the survey who were real estate agents acknowledged that it is tougher to sell house whose inhabitants were smokers.
- Home owners lose up to $107,000 on a residence located in Ontario, where the average resale value of homes is presently $369,000(!)
- About 56% of the participants agreed that majority of buyers would dislike homes which have been previously occupied by smokers. Similarly, about 26% of the respondents asserted that most buyers would vehemently oppose purchasing homes belonging to smokers!
- Nearly half of the participants said that smoking inside homes adversely impacts resale valuation of properties.
- According to other respondents, smokers stain walls and carpets of homes, besides leaving a foul stench.
I am not sure if the impact of smoking on your home value is quite as drastic as this study makes it. Pharmaceuticals are well known to have a way with numbers and statistics. Nonetheless there now is (yet another) reason to quit smoking.
