Quiz 1 (13 April 26) REV111

What are the most important factors that affect market value by ranking?

• ·    ·       Factor 1: Location.

  ·       Factor 2: Comparable Sales in the Area.

  ·       Factor 3: Condition of the Property.

  ·       Factor 4: Size and Layout of the Property.

  ·       Factor 5: Market Demand and Trends.

• ·       Factor 1: Location.

  ·       Factor 2: Size and Layout of the Property.

  ·       Factor 3: Condition of the Property.

  ·       Factor 4: Comparable Sales in the Area.

  ·       Factor 5: Market Demand and Trends.

• ·       Factor 1: Location.

  ·       Factor 2: Size and Layout of the Property.

  ·       Factor 3: Condition of the Property.

  ·       Factor 4: Market Demand and Trends.

  ·       Factor 5: Comparable Sales in the Area.

What are the three most important things in real estate?

• location, location, and location.

• location, size, and market demand.

• location, condition of the property, and market demand.

The following, which factors affect the market value of real estate from sectors related to ECONOMY?

• 1. Inflation Rate -a rise in the general level of prices of goods and services in the economy over a year. Inflation reflects an erosion in the purchasing power of money.

• 1. Consumer Sentiment – an important economic indicator that gauges consumers’ buying intentions and level of optimism or pessimism going forward.

• 1. Income level and income growth of population – the average income level and income growth of people in a particular area determine the purchasing power of the people in that area.

• 1. Conventional Public transportation such as bus stops – is important in areas without LRT/MRT stations, or to get to the LRT/MRT stations.

The following: which factors affect the market value of real estate from sectors related to demographics?

• 1. Size of population and its growth (rural-to-urban migration) – causing property demand to exceed supply thereby pushing prices up.

• 1. Age and distribution of population – working adults aged between 25 and 45 years are more likely to buy homes.

• 1. Income level and income growth of population – the average income level and income growth of people in a particular area determine the purchasing power of the people in that area.

• 1. Consumer behaviour of the population – for example, young professionals in Damansara or Mont Kiara areas are more inclined to go for the stylish and fashionable condominiums or fabulous lifestyle concept homes.

The following: which factors affect the market value of real estate from sectors related to location and accessibility?

• 1. Easy access to highways/infrastructure – centralized locations in urban areas with a criss-cross of highways such as the LDP, Kesas or NKVE are higher in demand and higher in value. There must be easy access into the highways.

• 1. Light Rail Transit (LRT) and Mass Rapid Transit (MRT) – within 20 minutes’ walking distance to LRT/MRT stations is convenient, but not too near to them to avoid parking congestion, noise and possibly more petty crime.

• 1. Conventional Public transportation such as bus stops – is important in areas without LRT/MRT stations, or to get to the LRT/MRT stations.

• 1. Income level and income growth of population – the average income level and income growth of people in a particular area determine the purchasing power of the people in that area.

The following: which factors affect the market value of real estate from sectors related to Facilities and Amenities?

• 1. Schools, colleges and universities – excellent learning institutions are magnets to home-hunting parents. For instance, Mont Kiara’s international school makes it a sought-after place by expatriates.

• 1. Shopping centres and hypermarkets – for convenience in buying all kinds of necessities, and because shopping is a favourite pass-time of Malaysians!

• 1. Variety and quality of businesses – a large cluster of shops catering to a wide variety of needs and tastes makes a place attractive. Variety creates complementarity effect – as a one-stop place for most shopping needs.

• 1. Traffic condition – affects people’s stress level and health, thereby affecting the property value in an area.

The following: which factors affect the market value of real estate from sectors related to Quality of Environment?

• 1. Serene, clean and green environment – this improves the quality of life and add value to the properties.

• 1. Developments or buildings in the neighbourhood – new developments/buildings in a neighbourhood improve the appeal of the location, whereas the presence of old/obsolete ones has the opposite effect.

• 1. Crime rate – safety is a basic need that ranks high in the desirability of a location, especially in an affluent neighbourhood.

• 1. Traffic condition – affects people’s stress level and health, thereby affecting the property value in an area.

The following: which factors affect the market value of real estate from sectors related to property features?

• 1. Branding/reputation of developer – affects consumer’s confidence in the developer’s ability to deliver quality, especially in sell-then-build schemes. In the economic recession, properties built by reputable developers tend to hold up their value better.

• 1. Lifestyle concepts – such as Setia Eco-Park and Desa Park City appeal to the usually affluent and discerning buyers who value a certain concept of lifestyle.

• 1. Gated and guarded – this has become a basic necessity of late due to soaring crime rates.

• 1. Standard and quality of building management – the building management can make or break the quality of maintenance and housekeeping of the premises, affecting the property’s reputation and value.

The following: which factors affect the market value of real estate from sectors related to Money Supply and Cost of borrowing?

• 1. Money supply – is the total stock of money in the economy, currency held by the public plus money in accounts in banks. The more money available in the economy and the banks, the more money is available for lending to property purchasers.

• 1. Ease of obtaining loan – Bank Negara’s lending guidelines for banks can affect purchaser’s eligibility in obtaining loans and the number of loans. Recent examples are the 70% cap (maximum margin) on third housing loan, and eligibility based on the borrower’s nett income instead of gross income. These measures have a cooling effect on the property market.

• 1. Interest rate – the Base Lending Rate (BLR) fixed by Bank Negara, which is the reference interest rate used by all banks in lending out money, also changes the cost of borrowing for property purchase. A reduction in BLR encourages purchase, whereas an increase in BLR dampens the desire to purchase.

• 1. Quality/taste of renovation/finishing/landscaping – this factor is especially important to renovated resale homes due to wide-ranging tastes of individual owners – some are enchanting or fabulous and others off-putting.

The following: which factors affect the market value of real estate from sectors related to Legal and Planning Control?

• 1. Availability of land – strategic vacant land in urban areas are diminishing, especially in the Klang Valley. Land prices are rising due to scarcity of land coupled with increasing population and housing needs. The state governments are able to alienate new lands for developments to the private sectors.

• 1. Zoning and rezoning of land use – for example, when Section 13 of Petaling Jaya was rezoned from industrial use to building/commercial use, land value in this location spiked.

• 1. Regeneration of area – an example is YTL’s renewal projects in Sentul which rejuvenated the whole area that was previously unappealing.

• 1. Property taxes – when Real Property Gain Tax (RPGT) is raised or lowered, property investors and speculators respond by opting to enter or exit the market, often en masse, thereby affecting property prices.