8 Things That Can Devalue Your Home
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With the property prices going upward for the past few years in Malaysia, many property owners would have celebrated the spike in value for their properties. However, not every property or location enjoy this appreciation, some still plunged in value, too!
Here are some of the factors that may have caused the depreciation of the unfortunate few properties:
1. Disaster-prone location
The clichéd saying most property investors repeat as a mantra, “Location! Location! Location!”, is still true. Property values are always closely correlated with where the properties are located. Just like how a property in a prime location will spike in value, a property’s value in unfavourable settings can stumble.
The problem is, some properties may seem to be promising in the beginning, but may fall from grace due to some unfortunate circumstances. Remember how the prices for houses in Bukit Antarabangsa dipped after a major landslide occurred? The owners probably did not see that coming when they first bought the properties.
Properties located in disaster-prone, would have suffered a drop in their property prices. Not only will the value suffer, banks may be sceptical to give out home loan for properties in these areas.
2. Unexpected developments
Sometimes, new developments can also cause a drop in your property’s value. Sudden announcements of high-voltage power lines or a sewage treatment plant being built in close proximity can adversely affect your property prices. Likewise, having a dumping or landfill site located nearby can also severely impact property valuations; affecting liveliness, and creating health and environmental concerns.
For properties known for the great view, this can easily change when a new development start coming up right in front of your unit, obscuring your view of KLCC, for example. This will also impact the price of your condo as the view is usually a selling point. With the recent MRT project in the Klang Valley, certain properties are surely expecting to suffer in value as a result.
3. Bad neighbourhood
Property appraisers termed it as external obsolescence, which, in literary definition means an incurable depreciation caused by external factors other than the property itself (in this case, devaluation caused by social factors). Now, the question is, how do you define a bad neighbourhood?
It’s really not hard to tell. Are the houses around yours well-maintained? Do you see poorly drawn graffiti and vandalism around? How about the people staying nearby (can you imagine inviting them for a cup of tea)? The types of shops nearby (are they mostly betting shops, pawn shops, or dodgy pubs?) and the frequent presence of police (high crime rates) can tell you a lot about a particular neighbourhood.
4. Foreclosure rate in the area
On top of that, foreclosures are usually a norm in bad communities too, posing risks to your property appraisals. Due to the normal practice of benchmarking prices of similar housing units to determine another, property appraisers might compare yours to those poorly maintained, devalued foreclosed ones. In addition to that, it will be an eyesore, just to see so many abandoned houses around yours.
5. Bad history
If a property has experienced a death or a murder before, this can really put a huge dent in the value of the property. Due to the conservative nature some people may have, it is hard to insist putting a high valuation on it with such a history, even though the property may be located in a prime area.
Equally affecting the prices of a property is whether the property has housed criminals and/or drug users before. It is only best to be honest and inform your buyer or tenant about it. Your prospects could discover the truth one way or another, and if they found you concealing such vital information, it will not only put dent to your property’s value, but also the relationship between you and the buyer or tenant.
6. Traffic and parking issues
According to the statistics collated by the Malaysia Automotive Association (MAA), the number of new passenger vehicles registered has been steadily increasing from the year 2009 to 2013. With the expected influx of new vehicle users, properties (residential and commercial) that do not have adequate parking spaces may face some serious backlash.
With more car users on the road, traffic issues are inevitable and with it, your property’s worth can be affected too. If a group of township planners suddenly decide to adjust the flow of traffic with the construction of an underpass or a flyover near your home to ease traffic, then your property price may be going for a dive. Not to mention all the noise and dust that these construction works may produce to bring your house’s value down further.
For condominiums, apartments or flats, inadequate parking bays will only result in traffic congestion outside the compound as most residents would have to park their cars by the roadside, sometimes illegally. The residents may even be ticketed for illegal parking and thus, will cause a drop in the demand for your property.
7. State of the property
It is hard to give high estimation for properties that have aged and been neglected so much that they are already in a state of dilapidation. If your house is filled with cracks on the walls, leaky rooftops, clogged pipes, mouldy floors, and looks like it is going to collapse in any moment, perhaps it is even a bad idea to have your property being appraised at all.
Even in the best location, the buyer will have to ensure they have the cash to spruce it up after buying it, which many may not be able to afford.
Make it an effort to upkeep your property from time to time. Perform the necessary refurbishments to ensure that your property still have the appeal even though it may have aged considerably. If the need arises, you can even consider having a complete overhaul of your home with renovation financing readily available nowadays.
For condominiums and apartments, always ensure the management is using the maintenance and sinking funds accordingly to upkeep the compound of the property.
8. Taboos
In a generally conservative society such as ours, certain taboos and beliefs can devalue your home too.
Typically a Chinese taboo, houses numbered four are usually shunned, due to the fact that four rhymes similarly to death in most of the Chinese dialects. Another numerical taboo that is largely avoided is the number 13 because it is believed to be unlucky. Many countries, including Malaysia, often have the 13th floor in high rise buildings omitted and replaced with other designations. If your house happens to be associated with such numerical values, perhaps approaching your town council to request for a different designation may help.
Other types of properties that are usually believed to be linked with bad fortune in Malaysia are those that face “T” junctions, below road levels and sloping steeply (access road sloping towards the main road) downwards.
Depending on which side you are on (a seller or a buyer), you can always put these points to good use. As a seller, being aware of your property’s shortcomings, and taking the right measures such as arming your property with incremental changes, seeking assistance from government offices and even targeting the right pool of buyers, can always help minimise the impacts. On the other hand, if you are a buyer, these points can be used to negotiate for a lower price.
