For anybody looking to invest in buying property, the price per square foot is something you need to know.
This calculation is one of the best ways to value a property - whether it is located in a suburban or urban area. It is also a useful calculation for comparing the differing valuations of properties to establish where your investment is worthwhile.
In this article, we take a look at how you can calculate a property’s price per square metre and how to apply this information where buying is on the agenda. And, the best part is, it’s not nearly as complicated as you probably imagine!
What Are The Square Foot Valuations In The U.K?
In the U.K., the price of a property per square foot is based on its size. Price per square foot decreases in value as a property’s size increases.
With this said, in sought-after areas such as popular cities or coastal locations, this calculation reverses. This means that the price per square foot increases as the property’s size does too.
How Easy Is It To Calculate Price Per Square Foot?
As we’ve mentioned, the process of calculating a property’s price per square foot isn’t nearly as complex as you’ve imagined.
Basically, the price per square foot of any property is calculated by looking at the sale price of the property then dividing that figure by its square footage.
There are many useful price per square foot online calculators that you can use for free to assist with this. Of course - it’s not an equation you’re likely to be able to do in your head.
Here’s a quick example of how calculating the price of a property based on square foot works:
Price per square foot = £290,000 / 1,400 = £207.14 - this means that per each square foot the property’s valuation is £207.14.
How To Compare Property Value Using Square Foot
Sometimes a property investor or buyer may be interested in multiple properties at once, and may be looking to find out which has the most value per square foot.
Below, we’ve included an example of how to easily compare the values of properties based on square foot.
One property with 1,400 square feet is listed for £290,000. The second property costs £310,000 and has 1,200 square feet.
Last but not least, the third property is 2,400 square feet in size and sells for £400,000. We can calculate the price per square foot for all three properties as follows:
⦁ Price per square foot for property 1 = £290,000 / 1,400 = £207.14
⦁ Price per square foot for property 2 = £310,000 / 1,200 = £258.33
⦁ Price per square foot for property 3 = £400,000 / 2,400 = £166.67
Comparing the three properties, you can see that the third, while more expensive, offers a lot more space.
As a result, it offers the best value for your money, as its price per square foot of floor space is much lower.
When purchasing a property, numerous other factors must be considered, but the price per square foot is always one of the most important factors!
Why Should You Care About A Property's Square Footage?
Put simply, the reason why the square footage of a property is important is that it’s one of the only measurements in property valuation that is not subjective.
Many of the other factors that are taken into account, such as the views, layout of the property, natural light levels, and even the property’s position on a street are all subjective. This means that they are based on personal preference.
When it comes to valuing a property based on square footage, it is a real, tangible calculation. It’s also incredibly meaningful!
Because of its tangibility, a square foot value calculation also affects mortgage valuation. It’s a way to underpin value and to know what you are paying based on the calculation.
For buyers, the calculation is very useful as it always you to easily compare prices and the value of properties you are interested in.
Are There Any Problems With Pricing A Property Based On Square Feet?
While square foot valuations are definitely useful, they also don’t provide a full picture to a buyer of a property. The calculation is a great indicator of space but it’s not necessarily a good indicator of the different factors to also consider.
The calculation won’t always work well for different properties either. For example, a home that has been designed in a particular way might not be reflected in the best light using price per square foot.
Price per square foot doesn’t account for volume either. Ceiling height is a very key factor in terms of volume - and this measurement isn’t included in the calculation.
Another example of where price per square foot becomes problematic is when you look at the outdoor space included.
Because outdoor spaces and gardens are listed independently from a living space, pricing a property based on square feet doesn’t account for properties that could have excellent development opportunities.
How PropertyHeads Can Help You Value Your Property
PropertyHeads is made up of a community of property enthusiasts that want to assist each other.
If you are looking to value your own property or you wish to compare the value of different properties you’re interested in - join us!
Our property experts can help you to determine where your money is best invested when it comes to purchasing a property.
And, if you’re a homeowner looking to put your property on the market, we’ll make sure your home is priced based on many factors, not just square footage.
You can use the PropertyHeads valuation tool to help you determine a property’s value per square foot.
Image source: https://unsplash.com/photos/rgJ1J8SDEAY
Added: January 25, 2023 10:29:37