Why location is so important when purchasing a property

Why is “LOCATION” so important when purchasing a property?

When planning to purchase a property, buyers should be informed of all the possible aspects that can be associated with this important decision that they are to make.

The issue of LOCATION is extremely pertinent as that is the one thing that you hear all the time…” Location, Location, Location”.

The questions that I intend to address (excuse the pun) relate to WHY? One needs to understand the reasons behind the focus on the where the property is situated…and these are inter-related…

This inter-relationship between the concepts is extremely important.

In summary: Property which consists of land and improvements possesses Utility which is inherent to a specific property as it can potentially provide services to satisfy human needs. This ensures that the property is Productive. Productivity is a net concept which implies that a property’s advantages outweigh its disadvantages for a specific person. By being productive as it possesses these advantages, it implies that the said property is an Economic Product. Such a product becomes scarce in relation to demand, and scarcity presupposes that it becomes valuable. Value (due to human cognitive thought processes) is the external advantage due to the property possessing these inherent and external characteristics. And then, of course, value means that it has a Price. People are prepared to pay for the property’s utility and productivity!

WHY LOCATION?

When linking these inherent and external features it becomes clear that the overriding factor is the property’s location in relation to the buyer’s needs and wants.

Linking these features in terms of location, imply that the inherent utilisation of the land and its improvements presuppose desirability…not just what a person needs, but also what he/she wants. Location determines whether these desires are met in terms of financial and lifestyle goals.

Then we can move on to the property’s productivity when considering location. An important consideration for a particular potential purchaser may well be whether there is potential for growth and development in the area. Can the area support demand over time?

Due to its productivity, property is quantified as an economic product and hence the balance between supply and demand plays a crucial role in determining a property’s value. Seeing that value determination is the outcome of human thought processes, location has two main components to consider, i.e. its convenience and exposure. In other words, location is an incredibly important factor in determining a property’s value and its perceived desirability for home buyers because of their perceptions/needs/wants and resultant thought processes. Utility, productivity and demand provide intrinsic value.

And then, of course, it has a price at which both buyers and sellers find it advantageous to trade. Prices are thus intrinsically established as the result of the interaction between supply and demand.

Buyers need to be informed so that they can evaluate all these associated aspects to make an informed decision…as to the most desirable location to suit themselves. This will enhance their quality of life and secure a sound investment.

Ultimately LOCATION is clearly the single most influential factor in determining a property’s desirability, value and price.

Please do not hesitate to contact me if you require further information/advice.

Pam Snyman

pams@redzproperties.co.za

021 881 3311

Pam Snyman - Chartered Practitioner Real Estate (CPRE); Cert.Dir. 
Member of the Institute of Directors of SA (IoDSA)
(MPhil, Dip Advanced Property Practice, Dip Property Investment & Valuation)
Board Member of Institute of Estate Agents SA (IEASA)
Real Estate and Related Services Chamber Committee Member of SSETA
Property Sector Charter Council Member (PSCC)