What happens to the value of a property when competition increases?

When competition increases in the real estate market, the value of a property typically decreases. This situation arises because an influx of similar properties for sale or rent means that buyers or tenants have more choices available to them. As more comparable options enter the market, property owners may find it necessary to lower their prices to attract potential buyers or renters. This increased supply can lead to a surplus, causing prices to drop as sellers compete for market share.

Additionally, the presence of increased competition often means that buyers have the advantage in negotiations, further driving down prices. Consequently, the overall demand may diminish as buyers can select properties that better meet their needs at lower prices. Overall, in a competitive market where many similar properties are available, the increased supply relative to demand typically results in decreased property values.