2009 '“ 2011 will go down in property history as a time in which certain trends gained momentum at a pace not seen before, said Bill Rawson, chairman of Rawson Properties, in a review of the past year '“ and the most noticeable of these trends, he said, has been downscaling.
'At all levels in the property sector,' he said, 'we saw a call for less expensive, smaller units with a concomitant falloff in the value of the more expensive homes'
This, said Rawson, has resulted in some lower and sectional title units being developed with less than 40m² of floor area and in new lower middle bracket homes now coming onto the market with as little as 60m² of floor space. Units this size, he said, can sell for anything from R450 000 to R1,2 million and the demand for this accommodation can only increase.
Upper middle and upper bracket homes, said Rawson have been through a period in which price drops in excess of 30% were the norm '“ and in this market it is still possible that the price drops will be seen but no longer at the levels experienced in 2010/2011.
This situation, he said, hits the retiree hard: he too wants to downscale but he cannot sell his existing home at a price acceptable to him and is often forced to stay on in the larger home.
By contrast, in the lower priced categories, said Rawson, signs of price stabilisation are now evident, with price growth beginning to match the inflation rate.
The dire economic conditions, added Rawson, have greatly increased the tendency to share homes.
'What we are seeing in SA was, I found, also happening in the USA: offspring will stay on in their parents home for five or six years. Young couples will also spend the first years of their married lives with parents '“ and renting out rooms to all comers is now a common practice'
A spinoff of the current situation, said Rawson, is that rentals are rising and rent increases, he estimates, are now around 8% per annum and investors in areas like Table View are finding that they can often get 7 to 10% return from day one. There have, he said, even been cases where a 12 to 13% return is achieved from the outset.
Farsighted buy-to-let investors are, therefore, once again building their portfolios and are often faring better than those who stuck to stocks or the money market.
For further information contact Bill Rawson on 021 658 7100 or email bill@rawsonproperties.com.
