Whether you are thinking about moving soon or simply want to understand what you’ve got – it is important to have an accurate understanding of your home’s current market value. A home’s value is not a static figure, but one that changes over time with market fluctuations, neighbourhood developments and ultimately finding a willing buyer. Near-identical houses on the same street can sometimes have wildly differing selling prices, with gardens, extensions, time of year and curb appeal (among many other factors) all impacting the price. So if you are wondering how your home compares with the competition, read on to discover how to understand how much your home is really worth, right now.
What is my home worth?
The short answer to this perennial question is simple – a house is only worth what buyers are prepared to pay for it. This is the only real metric that determines value. Despite this seemingly straightforward answer, it is not as easy to know exactly what this figure will be in advance! This is where understanding the current property market in your area comes in. Knowing what prices are doing can help homeowners make informed decisions on the best times to buy and sell, and ultimately sell for higher amounts.
Whilst estate agents, with their unparalleled knowledge of property markets can advise on these issues, homeowners can also undertake research of their own. To understand your home’s current market value, the first thing to analyse is your local property market.
How can I understand my local property market?
When assessing the value of your home, thinking about whether your local market is “heating-up” or “cooling-down” will help you arrive at an accurate valuation. House prices usually increase as sales increase – so if you can see lots of for sale boards and online listings with properties selling at a rapid pace, the chances are that you are in a good area. Conversely, if houses are languishing on listings for months on end with little observable competition, you may have to reduce the valuation of your home.
Pay attention to the price that houses are actually selling for (whether this is over or under average asking prices), as this will also give an impression of buyer competition. The UK House Price Index (which uses data from HM Land Registry) publishes information on how much homes have sold for on particular streets. The information goes back to 1995 but is only updated a few months after transactions have taken place. Do consider if there have been any major events which might have impacted either the national property market or local prices in the interim.
What data is available?
The UK House Price Index is a good tool to use for understanding historic property prices, however if you are looking for more up-to-date information – online listings and estate agents are a great place to start. Portals such as Rightmove offer a “market information” tab on each home, which allows buyers to search information on nearby properties. If you know that a neighbour is currently selling their home, use this to research other “for sale”, “under offer” and “sold” properties in your area. This will give a good impression of the current market for similar properties in your specific location.
Many estate agents also offer quarterly reports on the local property market, so it is also well worth signing-up to mailing lists and registering your interest. Even if you are not looking to buy immediately, it will help you understand what your home could be worth. Pay attention to what’s selling (are fully renovated or unrenovated properties more popular at the moment for example?), for what price and how quickly. The more you immerse yourself in the world of property, the better understanding you’ll get.
What factors impact house prices?
As well as your local property market, there are many additional factors that impact house prices – many of which might not be immediately obvious. Some aspects to consider include:
- Your home’s size and age – including structural integrity, number of bedrooms and bathrooms, size and aspect of the garden.
- Your local neighbourhood – how would your home’s location appeal to different buyer demographics?
- Local economic conditions – this includes employment rates and average wages. Are things on the up or down in your area?
- Comparable homes currently on the market – how does your property relate to what else is out there for a similar price?
- Renovations and repairs – although cosmetic detailing doesn’t impact valuations as much as many homeowners might think, it certainly makes homes more appealing to buyers, often resulting in quicker sales.
Employment
We started this guide with the simple answer that a home’s value rests solely on the amount a buyer is prepared to pay. The question then remains, how much can buyers actually pay?
Employment is the main way that buyers afford to buy their homes (with mortgage affordability checks directly tied to income), and the main driver of relocation searches. If your area is currently experiencing an increase in employment and higher salaries, the chances are that people will be looking to move there and prices will increase. Heightened buyer demand results in a “Sellers’ Market” which means there are more buyers (demand) than homes on the market (supply). In this situation, homeowners have the advantage with competition for homes fierce. This can also often lead to bidding wars and homes selling above listed prices.
When assessing your home’s current market value, do be wary of the opposite situation. If you’ve noticed lay-offs from large employers or high-street shops closing – the chances are that local economic hardships will translate to the property market. To understand your local employment situation better, keep an eye on job adverts and check your local council’s economic and employment data trends. This is usually published online.
Housing supply
When assessing the current market value of your home – never forget the laws of supply and demand. Simply put, if there is low buyer demand but a high supply of houses, the value of homes is likely to go down. If there is a low number of houses coming to market and high buyer demand, then sellers will be in a good position to increase their asking prices. Keep a track of the number of houses being listed on online portals (as well as the number going under offer) and this will give you a firm understanding of current supply and demand in your area.
Your local neighbourhood
If you’ve lived in your home for a long time, you’ll be incredibly familiar with your local neighbourhood. You’ll know all the best restaurants, the local parks and the reasons why you love living where you do. But will a buyer know about this, or appreciate the same things?
Take a walk around your neighbourhood with fresh eyes, thinking about the target market your home is likely to appeal to. Two bed terraces (for instance) are more likely to appeal to young couples and first-time buyers. This demographic will prize a lively atmosphere, local bars and coffee shops more highly than a family looking to settle-down into a three or four bed home. If there are plenty of remodels and renovations taking place nearby, this is a further indication that the economy is doing well and there’s a good deal of confidence in the area.
As part of this, don’t ignore any aspects of your home’s situation. Does it back onto a noisy pub garden, or is there a busy road nearby? Look at property prices for homes with similar issues – are they selling quickly, or sitting on listings for some time? Local amenities such as public transport, proximity to shops, parks and schools will all impact the value and ultimate appeal of your home.
Ask for professional help
Whilst there certainly is research you can undertake yourself – nothing beats a professional opinion. Most estate agents will offer a free valuation service (either visiting in-person or via a video call), so why not take advantage of this? Even if you don’t plan to sell your home immediately, they’ll be able to provide a realistic idea of what your property is worth.
Don’t be scared to ask several estate agents if they can value your property. Compare the estimations you receive. The average valuation is likely to be closest to your home’s true market value. Estate agents can further advise on the best and worst times to come to market, as well as ways that you can increase the value of your home, through aspects such as curb appeal, kitchen and bathroom renovations, a lick of paint or sprucing up the garden.
To gain a better understanding of your home’s market value, start by assessing your local property market itself before evaluating your individual property (it’s relative strengths and drawbacks) as well as how your local economy and neighbourhood is performing. If in doubt, don’t forget you can ask estate agents to provide an estimated value for your home. Good luck, and happy valuing!
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