Here’s why you should be upgrading

The lowest interest rates in three decades, combined with tight credit and depressed property prices, make this an unusually good time for homeowners to upgrade to bigger or more luxurious properties.

 “It’s true that many people are still downscaling for financial reasons, but according to the latest FNB Property Barometer, some 16% of home sellers currently list upgrading as their main reason for selling,“ says Berry Everitt, MD of the Chas Everitt International property group. “There are always people who need a bigger home to accommodate an expanding family, for example, or who want to move to a more upmarket area.
 “Quite a number of those who sell primarily for security reasons also intend moving to a more expensive property in a gated village or estate, for example, and we also find that many retirees whose aim is to move from a big family home will actually upgrade in terms of luxury features and area when they select their smaller retirement properties.”

 And now, he says, is a really good time to be making this sort of move. “Currently nine out of 10 sellers are prepared to lower their asking prices in order to achieve a sale, with the average concession being around 11%. What is more, we expect this openness to negotiation to increase over the next few months as sellers get anxious about their year-end relocation plans and the possibility of an interest rate rise that will not only increase their holding costs but may influence their ability to secure home loans for their next purchases.”

 Of course, says Everitt, no one wants to take a “loss” on their property, but sellers who plan to upgrade are coming to appreciate that they stand to gain substantially by achieving a quick sale that sets them free to do so.
 “If you have a R1m property on the market and have to take an 11% drop in price to achieve a sale, for example, you will “lose” R110 000. However, if you can then buy a R1,5m house for 11% less (R1,335m), your net gain will be R55 000,” he says
 “What is more, if you do it now while interest rates are still low it should be much easier to get a bond for your next home than when rates start rising again, which they are expected to do towards the end of this year. The household earnings required for a bond of R1,2m are currently around R37 000 a month, but if you wait until the mortgage interest rate rises to 10%, for example, the earnings required for the same bond would be around R39 000 a month.”
In short, he says, the current market presents an unusual opportunity to get “much more house for your money” – and achieve higher than average growth when property prices start rising again.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
    • 17 Apr 2018
      The recent interest rate cut has stoked the coals in the first-time buyer’s market. At least for the next two months until the next interest rate announcement, homeowners are guaranteed lower monthly instalments than in the previous quarter. But, is it wise to take out a 100% bond just to enter the property market while interest rates are low?
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us