select
|

Drop your sights if you want to downscale

If you’re planning to downscale to a smaller home, it will have to be at least two sizes smaller now to make the move worthwhile.
 
That’s the word from Jan Davel, MD of the RealNet property group, who notes that First National Bank’s latest research shows that one in four of all home sellers is trying to downscale for financial reasons.
 
“However, Absa’s latest figures indicate just how tricky it is becoming for many middle-income people to benefit from such a move. They reveal that the average nominal price of a small home was 28,3% up year-on-year in August to R837 100, while the average price of a medium-size home was just 5,4% up to R961 700.
 
“And using these values, the costs of selling a medium-size home and buying a small one would amount to around R90 000 – so in most cases there would probably be very little monetary compensation in such a sale for all the upheaval of moving – and more importantly, hardly any cash available for a deposit on the smaller home.”
 
On the other hand, he says, Absa’s figures show that the difference between the average price of a large home and the average price of a small home (two steps down) now stands at around R622 000. “The costs of sale and repurchase in this case would amount to around R120 000, so there should be plenty left to justify the sale and put down a significant deposit on the new home.”
 
Indeed, says Davel, the steady increase in property operating costs over the past two years has driven an increasing trend of downscaling from large homes to small ones, and this has in turn supported much stronger price growth in lower-priced suburbs than in other areas.
 
“And that is why downscaling is much more difficult now for the owners of medium-sized homes – and certainly one of the reasons we are seeing a really significant increase in demand and a growing shortage of homes in the under-R500 000 price category.
 
“This price category is also where the attention of most first-time buyers is concentrated, and in fact the latest data from Lightstone shows that 38% of all sales recorded in the Deeds office over the past 12 months were priced below R400 000, up from 27% in 2004. So we believe this is where developers and the financial institutions should be focusing their attention right now.”
Issued by RealNet


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
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.
        
    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