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What Goes Into Pricing A House?

What Goes Into Pricing A House?

A house is a basic necessity of life which provides shelter and security for people. Yet, many households in Ghana cannot afford comfortable place for shelter which is causing high housing deficit in the country. According to the Minister for Works and Housing, Mr. Francis Asenso-Boakye, the national housing deficit is in excess of two million housing units.

As Ghanaian households struggle to find shelter and still make ends meet, their plight is spawning a series of related social problems in communities all across the country, making the shortage of affordable housing one of the nation’s most pressing public policy issues today.

Most Ghanaians prefer to build and own their houses which accounts for the rapid development. Access to affordable housing for the majority of households is a challenge and the pandemic has affected the level of household incomes for both formal and informal employed workers. The pandemic has further impacted the Ghanaian construction industry as well as engagements with investors focused on affordable housing delivery.

This coupled with house pricing in Ghana not being regulated and/or enforced, most investors price houses based on their own discretion. Real Estate Times Africa looked into some of the component that influence house pricing generally.

Location.

Location is one major component of pricing a home in Ghana, a house price in the city of Accra would not be the same as a house price at the outskirt of the city. Most people prefer to stay in the city because of proximity. There is an implied principle in real estate that, ‘you either pay more rent and pay less for transportation or pay less rent and pay more for transportation’. This principle explains location based on proximity for recreational centers, highways, public transit, quality schools, malls etc. and how it affects house pricing. Thus, location determines how much value to assign to a house. When it comes to estimating a house value, location can be more important than even the size and condition of the house.

Land and House size.

The size of the land and house will definitely have effect on the price. The smaller the land the less price and vice versa, likewise the size and/or number of bedrooms as well as facilities in the building determines the resources that went into putting up such house which will also affect the price since no investor would like to run at a lost. A house size has a major influence on its value, size is an important element to consider, since a bigger home can positively impact its valuation.

Neighborhood.

Neighborhood is another key indicator for home buyers, they are very careful and oriented with the area they stay which also comes with a cost. Home’s value in a neighborhood is the sale prices of similar homes sold recently, this is how house pricing are determined in a neighborhood, which is very difficult because every house has a unique feature which amount to a specific price.

To be precise with the price, you would need to account for each different feature, to come out with a fair cost but it’s not done, houses are priced based on one’s own discretion without any proper regulations.

Economic indicators

The broader economy often impacts a person’s ability to buy or sell a home, so in slower economic conditions, the housing market can struggle. For example, if employment or wage growth slows, then fewer people might be able to afford a home or there may also be less opportunity to relocate for new opportunities. It’s important to keep up with the current status of home sales and home price appreciation in your area, especially when as you evaluate the best time to sell your house.

 

Source: Nana Agyei Sikapa Ofosu-Manu(Real Estate Times Africa)

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