select
|

Do your sums before you downscale

If you’re thinking of moving to a smaller home that is easier to manage and more secure, you might need to “downscale” more than you thought to make the move worthwhile.
 
So says Richard Gray, CEO of Harcourts Real Estate, who notes that about one in four home sales these days is being made by empty-nesters hoping to downscale from a family home and hopefully cut costs while also improving their personal security.
 
“However, the latest housing review from Absa illustrates that there is really not that much benefit in moving from a medium-size house to a small house at the moment. It shows that the average price of a pre-owned, medium-sized home achieved year-on-year growth of 6,9% in August this year to R1,14m, while the average price of a small home grew 11,4% to around R824 000.
 
“And using these values, the costs of selling a medium-sized home and buying a small one would total around R124 000, including selling commission, bond registration, legal fees and transfer duty – which would leave just over R190 000 to cover a deposit on the new home and the costs of moving,” he says.
 
“What is more, the margin would probably be even less if the smaller home was in a new development, as newly-built homes are now at least 20% more expensive than pre-owned homes of the same size. The projected savings on maintenance, utilities and possibly security would thus have to be really considerable to make the change worthwhile.”
 
On the other hand, Gray notes, those who are prepared to make a major change from a large house to a small house do stand to achieve immediate financial benefits. The Absa figures show that the average price of a large home is currently R1,77m, which means that the total costs of selling and buying again would be about R168 000, and that there would be R778 000 left to put towards a deposit and/ or retirement savings.
 
“The message here is that owners who are thinking of downscaling must do their homework first. They need to establish the real differential between what they are selling and what they are hoping to buy – and how they could possibly increase this,” he says.
 
Owners moving from a medium-size house, for example, could perhaps consider moving to a townhouse or an apartment rather than a small house. “Or they might choose – as an increasing number of people all over the country are doing – to move from a big city to a smaller home or retirement village in a country town, where property prices are generally lower.
 
“Either way, however, they should not make a hasty decision that could negatively affect their financial situation for years to come.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK