As a property company one of our regular tasks is to evaluate the market value, for either sale or rent, of properties.

This is far from an exact science as at the end of the day something is only worth what someone else is prepared to pay for it, which is not always an known exact number as not everything is worth the same to different people.

Usually we perform "relative valuations" by which I mean we look, for example, at the current market prices of similar units, sales history, how the market is developing, how demand is changing in a given area and how quickly the owner needs to sell.

To come up with a ballpark figure is a relatively easy task, however, it takes real experience to understand the subtleties of the market and what is the correct market price. This difference in experience can often mean the difference of thousands of pounds/euros to investors, so it is important to know if you are getting the best possible advice from your agent.

A deeper question is just what is the "fundamental value" of a property. This is a very difficult, perhaps near impossible, question to answer and is where a view of history and the current world order is of vital importance.

To get a sense for fundamental value one could look at various local and international economic indicators, how supply and demand are changing in the market, demographic trends, currency trends, government regulation, yields vs interest rates, availability of finance and so on. It's very difficult to predict the future and especially major "events". Only history can reveal the right answer and such decisions always comes down to making the best judgment you can at the time.

When buying a property for investment purposes I typically use a fundamental value approach to decide "when" to buy or sell in a given market and a relative value approach to decide at what "price" I should buy or sell at.

As part of our service we offer free property valuations to all investors. Just get in touch if you require a free valuation for your property portfolio.

Simon Tweddle (CEO & Co Owner of Sim Property Group)