Are concerned with the value of a property in London, and paying the wrong price for it?
Unsurprisingly, most people are because no one wants to make an expensive mistake or look stupid.
But how can you be sure that you are not being fooled by the estate agent or seller?
One of the most popular ways of determining the value of a property in London is to use pound-per-square-foot or square-meter comparisons. If this is new to you, it basically means dividing the price of the property by the size to produce a price per sq.ft.
Why This Property Valuation Technique?
This style of property valuation has become more popular in the last 15-20 years because of the new build developments marketing apartments in this fashion. Indeed, when I started Mercury Homesearch over 20 years ago, many property details still didn’t include floorplans making it a challenge to accurately value a property.
However, price per square foot comparisons can be quite dangerous when used to value a house, so you must be aware that they are quite a blunt instrument. They work well in new developments because most of the apartments tend to have a similar layout, so the difference in price tends to be due to what floor the property is located on and the corresponding view. Normally, the higher the floor, the more expensive the apartment on a price per sq.ft. basis.
Unfortunately, when buying a traditional property, it is far more complicated to value the property. For example, first floor houses in Kensington are likely to be far more expensive because in a traditional stucco-fronted property, the ceiling heights will be much better than on the third or fourth floor. There may also not be a lift in the building, thus making the latter less attractive.
How to value a house, areas to consider?
So, when determining the value of a property on a price per square foot judgement, you must not just look at the bare figures as there are many other factors associated to your property valuation in London, such as:
- Ceiling heights
- Is there a lift?
- Condition of the property
- Style of the property
- Is there outside space?
- Number of bathrooms
- Length of lease
- Service charge
- Other facilities
This is far from an extensive list, but the key point is that you need to ensure that you are comparing like for like, because it is very easy for an estate agent to tell you that another property just around the corner has sold for £2,000 per sq.ft. and the one you are considering is £1700 per sq.ft., so you would be buying a bargain.
But as you can hopefully see, this may be a misleading comparator. The one that sold for £2000 may be a much better property or the person who bought it may have just massively overpaid! One comparator is simply not enough.
In short, you have to have a very clear understanding of prices in your target market. In some cases, prices can vary dramatically within a street itself, let alone an entire area like Belgravia or Knightsbridge.
It is very easy to make an incredibly expensive mistake and value a house incorrectly, so please ensure that you are comparing apples with apples when making a price per square foot property valuation in London. Otherwise, and excuse this dreadful pun, you will end up with a lemon…