More property owners upgrade and improve their homes

An increasing percentage of home owners are upgrading and improving their homes, according to an FNB report released yesterday.

This trend is attributed to the high cost of selling and buying a new home and the inability of homeowners to afford to buy a new house.

John Loos, a household and property sector strategist at FNB, said there was a further improvement in estate agent perceptions of home maintenance and upgrades in the third quarter to continue a broad improving trend that dated back to late 2012.

Loos said the estimated percentage of homeowners doing value adding upgrades rose to 26 percent in the third quarter of this year from only 3 percent in the first half of 2013. This was lower than the 43 percent achieved in 2004, but is the highest estimated percentage since the second quarter of 2007.

Loos said 78 percent of homeowners were undertaking home improvements for their own use while 12 percent were doing so because they "can't afford to buy elsewhere".

He said FNB's estate agent survey still pointed to limited speculative building behaviour at 9.5 percent of total home improvements compared to 24.5 percent speculative activity in early 2006.

Samuel Seeff, the chairman of Seeff Properties, said this week homeowners with homes in the R5 million to R7m and above price category were reluctant to sell their properties and would rather upgrade them because of the high transactions costs involved in selling and buying a new home.

Seeff said the legislated transaction costs were too high when transfer costs, transfer were factored into any transaction. He said sellers in some instances had to pay up to 20 percent of the value of the purchase price just in costs.

Seeff said the recent increase in transfer duty to 11 percent on transactions above R2.25m was a factor in driving sellers to rethink whether they wanted to be selling their homes.

While the transfer duty increase from 8 percent to 11 percent may seem small, it translated to anything upwards of 20 percent to 40 percent and an additional R70 500 to R670 500 in some instances, he said.

Seeff said the increase in transfer duty was counter productive. "The government gets 3 percent more on every transaction above a certain level, but if one transaction doesn't go ahead, it negates 10 or 12 transactions and the increased money government is trying to generate," he said.

Loos said estate agents still perceived only limited downward movement in the "only attending to basic maintenance" category, which was a positive sign. He said an increase in this category could signal that the agents may be starting to perceive rising financial stress in their areas, but there is not any sign of such deterioration yet.

Loos said it was significant that agents perceived further increases in "value adding upgrades", the top level of home investment, and "maintaining and making some improvements" category. This kept the overall home investment confidence indicator rising.

However, Loos said near term trends in home investment would be interesting to watch given the ongoing weak levels of economic growth and consumer confidence. "At present, the risk of a domestic recession is significant," he said.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us