Many first-time home buyers believe that a house’s physical characteristics will increase its property value. However, the physical structure of a property depreciates over time, while the land it sits on typically increases in value. Put simply; land appreciates because it is in short supply. After all, no one is creating new earth. As a result, as the population grows, so does the demand for land, driving up its price over time. And this is why land sold at 400,000 naira this year (like at the Garden City) can magically rise to 3,000,000 in the next year.


You’ll soon find out.

What is Appreciation?

In general, appreciation is an increase in the value of an asset over time. Increases in prices can occur for various reasons, including increased demand or weakening supply and changes in inflation or interest rates. This is the inverse of depreciation, which is a reduction in the value of an asset over time. 

The appreciation rate is the rate at which the value of an asset grows and vice versa for the depreciation rate. The awesome thing is that, while the value of a building might depreciate, the value of the land beneath it will never drop.

Having known what appreciation is, 

How then does appreciation work?

An asset’s owner may not always be aware of an increase in value even though its value has increased. A realization of the increase occurs if the owner revalues the asset at a higher cost on their financial statements. In other words, the owner has to pay attention to the changes in the environment throughout the period of land ownership. Has a new school, high standard school been built nearby? Was the water drainage system upgraded? If there’s been any positive change, then you can be sure that your property has appreciated. You can make estimations base on the appreciation rate or, to get the exact price, you can hire an appraiser. 

Having understood what appreciation is, the next thing we should know is how a piece of property can appreciate. This may look like bad English, but let’s keep the meaning of appreciation at the back of our minds concerning this content.

Okay, so back to the question, 

How can my property appreciate?

The property’s location, plans for its future development, and physical features are just a few of the variables that can affect its price. Making improvements to your property will also increase its value. 

  1. Location: Property located in an area that has experienced development will be worth more than one that has not. Therefore, you should buy properties only in high-profile places or places with the potential for development.
  2. Demand and Supply: Prices of properties in an area are inevitably going to rise when there is an increase in demand for those properties. So, make moves to increase your demand. You could plant trees on the property or fence it round. People will demand more for property with added value.
  3. Economic Activity: Properties in places with higher economic activity. In other words properties close to markets, schools, leisure places etc will appreciate faster. If you have property in a place without these, you can make moves to create them. Coordinating the community members towards enhancing the value of the area. 

The Garden City has the perfect location, is steadily developing and is in high demand. That means, if you buy land in the Garden City today at ₦400,000 and just wait one year, your asset will be priced at millions. Just chat us up.


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