Factors that Affect Property Valuation in Malaysia

2021-10-28

Property valuation, sometimes referred to as real estate appraisal, is the process of determining how much a property is worth if it were put up for sale.

The first step in persuading prospective homeowners to take an interest in what you have to offer is to estimate the worth of your property.

General economic trends, property location, general property market circumstances, general demographics, recent upgrades, and the property itself are the factors taken into account when valuing a property.

In Malaysia, a property company or developer often uses the sales comparison technique, which uses the Valuation and Property Services Department's (JPPH) latest transacted property prices.

They will, however, make the required changes based on the property's condition and the value generated by improvements (if any).

As a result, properties in the same area that are close to one other will not always have the same value.

Aside from that, variables such as the location of the property and surrounding amenities will also be considered.

Explaining the factors that affect property valuation in Malaysia.

1. General Economic Trends

When the economy is booming, and there are new property projects and housing developments, people will be more likely to buy homes since employment, wage levels, and labour markets are all improving.

People will be more ready to spend more on houses during these periods, which will likely drive up prices.

As a result, it wouldn't be unfair to demand a greater fee, particularly if you've been given a high valuation.

2. Location of Property

Is the property close to major central monuments, offices, and public buildings?

Is it in a neighbourhood that is highly desired by potential homeowners because of the amenities?

Or maybe it's well-connected, with several buses and trains serving the area?

These are some of the factors that might make a property extremely desirable and appealing to a large number of potential purchasers.

3. Conditions of the General Property Market

Another factor to analyze is the property market's demand and supply trends.

Property companies check to see whether buyers favour properties in a specific neighbourhood over those in other areas.

However, if almost every other house in the region where a property is located goes on the market at the same time, it will be more difficult to persuade potential buyers that yours is the better choice.

3. General Demographics

Is the property in a region where the majority of the residents are expatriates?

Then smaller, more compact high-rises, where people can be part of a bigger community and have various levels of protection, would appeal to buyers.

Prospective purchasers may choose larger homes to accommodate more people if it's located in a neighbourhood with young professionals and expanding families.

4. The Property Itself

A larger property (with a bigger floor area) will, of course, fetch a higher price than a smaller one in the same neighbourhood.

If the property offers any extra features, such as round-the-clock security, swimming pools, gyms, and/or parking spots, purchasers will be ready to pay a higher price merely to have them.

People's purchase decisions will also be influenced by whether the property is freehold or leasehold.

The owner of a freehold title owns the property permanently, but the owner of a leasehold title loses ownership after the lease term expires.

As a result, more individuals are opting to own freehold properties.

5. Recent Renovations

The value of a property will be affected if there have been recent modifications, especially big ones like upgrading materials or erecting a partition in one section of the house to create more private rooms.

Even little improvements to improve and enhance the overall quality of the property for the future owners will lead to a higher property worth.

In a Nutshell

Property valuation is an important aspect of the buying and selling process that many people neglect.

Greater knowledge of what makes your property more (or less) valuable might aid you in sustaining the long-term worth of your property or in making a purchasing or investment choice.