Real estate has long been the go-to investment for those looking to build long-term wealth for generations. If you invest in real estate -- or even if you just own a home -- then appreciation should be top of mind. Not only will appreciation impact how much equity you have in the property, but it will also influence your future home sale and, more importantly, how much you stand to make from it.

There are so many ways low-income regular salary earners can exploit one of the benefits of real estate to their advantage. Get rid of all the noise and useless choruses and plan properly to own your first home, if you're a prospective first-time homebuyer. In real estate, appreciation refers to your property’s value or, more specifically, how much its value increases over time.

On top of this, you’ll also enjoy more equity. You can tap into this through a cash-out refinance, home equity loan, or home equity line of credit and use the funds to improve your property (meaning even more appreciation) or to put toward the down payment on a new investment.


What impacts real estate appreciation?

How fast (and how much) a piece of real estate appreciates depends on a whole slew of factors, including location, housing market condition, interest rates, and more. Here are some of the most important factors that influence a property’s appreciation.

• Market conditions: Local supply and demand (and the area’s real estate market in general) heavily influences a property’s value. If properties of a similar size and condition are in high demand in your area, value will go up. If demand is down and there are many similar homes on the market, value will go down.

• Improvements: A property’s features, amenities, and upgrades all influence its value, too. Remodeling a home’s kitchen, for instance, might add a few thousand cedis to its value upon completion. Finishing the porch, adding another bathroom, or swapping carpet for tile are other examples of value-adding improvements.

• Location: A property’s location is a big influencer. If the neighborhood surrounding your property is growing, adding new businesses and opening up more jobs, local house prices tend to increase. If the community is struggling or businesses are closing, it usually results in lower values instead.

• Interest rate trends: Low mortgage rates typically result in more demand, which drives up values and causes steeper home price appreciation. Higher rates, on the other hand, do the opposite. They shut out buyers and stifle demand, which eventually sends property values downward.


The overall economy (including employment, population growth, and more) plays into property appreciation, too -- at least at the larger scale. When the economy is weak and consumers are struggling, real estate tends to be less in demand (because many people can’t afford it or they may not be able to qualify for financing). When the economy is strong and employment is up, though, you often see appreciation rates start to rise.



How can you help a property appreciate faster?

If your real estate isn’t appreciating at the rate you’d like to see, there are several ways you can move the needle.

• Make smart upgrades: Improving your property can help its value, but just make sure you choose wisely. Not all updates add value (and some can even hurt it).

• Improve the property’s efficiency: If you can cut down on how much energy the property needs to operate, it should increase the value in step. This might mean swapping out the appliances for Energy Efficient ones, adding solar panels, installing a smart thermostat, or just planting some smartly placed trees around the perimeter.



A. The GHS120,000 One-Bedroom House Price Example:

 GHS3,000, or, GHS6,000, or GHS9,000, or GHS12,000 is all you need to move-in (not required upfront when you signup) as explained here in one of our real-life example computations.



B. Calculating Future Value Based On Appreciation

Whether you use option 1 or 2, you will arrive at the same future value of a property priced at GHS120,000 and with a conservative annual rate of appreciation of 5%. Note: Property values typically appreciates in double digits in Ghana. Also one of the benefits of our rent-to-buy service is property values and rents are fixed for the entire maximum 5yrs (60 months) that you occupy the property, benefiting from any property appreciation out the gate. 


Option 1:

To calculate the amount an investment will be worth in the future based on the appreciation rate, you need to know how long the investment will appreciate and how much it is worth at the start.

First, divide the appreciation rate by 100 to convert it to a decimal. Second, add 1. Third, raise the result to the power of the number of years the investment will appreciate. Fourth, multiply the result by the initial investment value.


For example:

Say that you are buying a house for GHS120,000 and you expect it to appreciate by 5.0 percent (conservative estimate) each year for the next five years.

To calculate what it will be worth at the end of five years, first divide 5.0 by 100 to get 0.05.

Second, add 1 to 0.05 to get 1.05.

Third, raise 1.05 to the fifth power (1.05^5) to get 1.2762815625. For the uninitiated, to calculate 1.05 raise to the power 5, you simply multiply the 1.05 to itself 5 times (1.05x1.05x1.05x1.05x1.05).

Fourth, multiply GHS120,000 by 1.2762815625 to find that the house is expected to appreciate to a value of GHS153,153.7875 (GHS153,153.79) after five years.


Option 2:

This may be be more familiar with most people, as it's more manual and we summarize it in the table below


Property Value At The BEGINNING Of (I)
Year 1 (GHS120,000)
Year 2 (GHS126,000)
Year 3 (GHS132,300)
Year 4 (GHS138,915)
Year 5 (GHS145,860.75)
Annual Appreciation Rate Each Year  (II)
Annual Appreciation Amount (III)
Change of Appreciation Value (IV) as at
 Year 1 (GHS6,000)
 Year 2 (GHS12,300)
 Year 3 (GHS18,915)
 Year 4 (GHS25,860.75)
 Year 5 (GHS33,153.79)
Property Vaue At The END Of (V) = I + III
Year 1 (GHS126,000)
Year 2 (GHS132,300)
Year 3 (GHS138,915)
Year 4 (GHS145,860.75)
Year 5 (GHS153,153.79)



C. Mortgage or Remortgaging Strategy

 So from our calculations in A and B above, this is what happens.


Number of Bedrooms
 One Bedroom
 One Bedroom
 One Bedroom
 One Bedroom
GSM Amount
Paid Equity After 5yrs (X)
Unrealized Equity After 5yrs (Y)
Potential Equity (Z =X+Y)




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