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Why you should have your property evaluated every 3 years

Since property is the most precious asset you can own, you'll want to keep abreast of its value by conducting regular property valuations.

Property Valuation

Article summary

  • An estate agent can assess the value of your property based on changes in the market, fluctuations in the interest rate, and renovations you may have made.
  • It’s advised to have a home evaluated every three to five years.
  • As well as allowing you to sell the home at a higher price, appreciating value provides you with increased equity to draw from.

A property is the most precious asset you can own, and a sound long-term investment because the value of a property tends to appreciate over time.

Property value affects how much you stand to make if you sell the property, but another thing to take into account is home equity. Home equity is the difference between the value of the home and what you owe on the home loan, and provides funds you can draw on to fund renovations, additional loans, or even someone’s college degree.

Estate agents are your best source of advice when determining the value of your property. Since the value of a property can change over time, we advise that you have a property reevaluated after a certain period so that you can take full advantage of your investment.

Why you need an estate agent

  • Estate agents provide insight into the property market and can use that knowledge to provide accurate valuation of your property.
  • Estate agents can assess the values or properties in your area and employ that information when calculating the value of your property.
  • Estate agents will evaluate your property for free.

How often should you evaluate your property?

Property values appreciate slowly over time, but it’s recommended to be evaluated every three to five years.

It’s not a bad idea to have your property evaluated after implementing major changes, such as renovations intended to boost its value.

Factors that can affect property value:

  1. The state of the market.
  2. Interest rates.
  3. Renovations.
  4. Location.
  5. Prices of other properties in the area.

1. The state of the market

One of the most important factors the estate agent will need to take into account is supply versus demand.

This determines whether we are in a buyer’s market or a seller’s market.

As of 2023, South Africa is in a buyer’s market because supply outstrips demand. The estate agent will take this into account when providing you with an assessment of the value of your home versus what you can expect to sell it for.

2. Interest rates

The South African Reserve Bank sets the repo rate, affecting the interest rates at which banks will lend.

The interest rate fluctuates over time and the price of a home will increase if the interest rate does, and vice versa.

As of 2023, the interest rate sits at 11.75%. There has been a succession of interest rate hikes in recent times as the SARB sought to combat inflation, but experts predicted there’d be a halt to the hikes, and their prediction was supported by the SARB’s decision to maintain the interest rate at 11.75% in September 2023.

Interest rates may even be lowered in the future. A house valuation will be especially useful if interest rates change dramatically.

3. Renovations

One of the most significant factors that affect the value of the home is any renovations you may have implemented.

Even minor renovations such as the addition of a smaller building beside the main building (like a tool shed or greenhouse) can affect the property’s value.

More significant renovations, such as kitchen renovations, will provide a significant boost. Kitchen renovations are deemed the most impactful on the value of a home.

The estate agent can incorporate any renovations you make into their updated valuation.

4. Location

Location is the most important factor when determining the value of a home.

You may be wondering why a location would need to be reevaluated. Well, say a new school, hospital, or shopping centre pops up nearby; this increases the facilities available in the location and, by extension, the value of the location.

Market trends can also dictate the appeal of a location. For example, the work-from-home lifestyle has led to a rise in demand for larger homes in scenic locations. So if you have a property located in an area that’s a popular target for semigration (such as a coastal area in the Western Cape) the value of your property could increase.

5. Price of other properties in the area

The value of other properties in your area is one of the primary factors agents take into account when assigning a valuation to a property.

All of the above factors mentioned, such as changes in the market, interest rates and alterations to the location, will affect the value of other properties in the area and thereby the value of your property.

Valuation of your property can have other benefits

Aside from providing you with an estimation of the value of your property,  an evaluation from an estate agent will:

  • Highlight the strengths and weaknesses of your property.
  • Provide suggestions on how you can improve the value of your home, such as areas that could be renovated, rooms that could be converted, and potential upgrades to furnishings, windows, walls etc
  • Provide advice on whether or not it’s a good time to put your home up for sale if you’re considering it.

Market value versus selling value

Keep in mind that the market value is a determination of what your home is worth compared to other homes in the area, but it’s not necessarily the price you’ll put a home up for sale for.

Factors can affect the sales price, such as whether it’s a buyer’s market or seller’s market, and how long the property has been on the market.

See the selling price as a starting point for negotiations, with the intention being to list it as close to the property value as possible acceptance of the fact that there may be some distance between the two.

For those looking to purchase a home

You may be looking to sell your home so you can use the funds to purchase a new one. Either way, getting prequalified will help you determine what you can afford and improve your chances of home loan approval.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.

Get prequalified for a home loan today

DIY with our online prequalification tool, or speak to an expert.

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