Property News Buying, Money

Investment Property

Prospective investors disheartened by the price of properties in South Africa at present may be interested to learn that smaller and more affordable properties are almost invariably the highest performers.

In fact, the latest statistics released by FNB show that affordable properties in major metros are appreciating more than twice as fast as their high-end counterparts – a trend that is likely to continue as political turmoil weakens consumer spending power.

Low and mid-range homes tend to appreciate faster than luxury properties on the residential market for several reasons. The first of these is the consistently high demand seen for properties of this type.

Smaller properties appeal to a much broader target market than other housing segments, attracting low income earners, first-time buyers, professionals looking for low-maintenance lifestyles, and elderly people scaling down.

Ongoing demand

Having such a wide pool of potential and repeat buyers ensures ongoing demand for these types of properties, regardless of economic conditions. If the economy is strong, and spending power is high, more first-time buyers and low income earners feed into the market on this entry level. If the economy weakens and consumers are forced to cut back on spending as we’re seeing at present, buyers who may have qualified for mid-range homes in better times feed into this market from above.

In addition to affordability, smaller homes also tend to require less maintenance, are easier to secure, have lower rates and taxes and lend themselves to a lock-up-and-go lifestyle. These factors are becoming increasingly sought-after by modern homeowners and are bolstering the already high demand for compact properties in all price ranges.

As in any market, high demand is inextricably linked to price growth and, historically, smaller homes have seen healthy appreciation even when other market segments have struggled.

House price inflation for small homes between 20m2 and 80m2 in South Africa was 8.1% in 2016 according to FNB’s Property Barometer report on House Price Indices by Size, released in November 2016. In contrast, medium sized homes of 80m2 to 230m2 appreciated by 5.8%, and large homes between 230m2 and 800m2 grew by a mere 3% on average, nationally.

Steady growth to continue

While the outlook for 2017 is uncertain thanks to the recent government reshuffle and resulting damage to the rand, small properties in South Africa’s major metros will continue to see steady growth.

Small homes have consistently outperformed larger properties for the last 15 years, during growth and recession periods alike. We may be entering tough times as a country, but people will always need somewhere to live, and compact properties are going to be the most attractive and accessible option for many of our citizens.

For investors, this could be a great opportunity – particularly when weighed together with the recently increased transfer duty threshold.

Property sales under R900,000 are exempt from transfer duty from 1 March 2017, which does help with the short-term affordability of an investment. It also opens the door for bigger investors to acquire a portfolio of small properties, avoiding the burden of transfer duty altogether, and capitalising on the superior growth potential of this market.

 


Article sourced from www.bizcommunity.com

Leave a Reply

You might also like...

8 Myths Preventing People From Real Estate Investing
Investing in Student Accommodation: Pros and Cons
Pros and Cons of Buying Property Through a Trust
Future of Property in Sectional Title Sector
Lightstone predicts a buyer’s market for 2017
Factors that determine property value
The 3 Worst Reasons To Buy A Home
Avoid These Most Common Pitfalls When Buying Or Selling Property
Be Careful Of Sophisticated Property Scammers When Buying Property
4 Basic Scenarios That Bring On Buyer’s Remorse
Avoid These Debt Hazards To Keep Your Home
SA Property Market Remains Safe Haven Asset For Investors
What To Do (And NOT To Do) When Looking To Sell Your Home
How Do Your Pets Affect The Selling Of Your Property?
4 Important Questions To Answer Whether You’re Ready To Buy A Home
4 Minimum Insurance Considerations For Body Corporate
6 Quick Tips When Buying A Home In An Estate
How To Sell Luxury Real Estate
How Hiving Living Emerges As New Housing Trend
City Or Suburbs: Where Should You Buy A Home In South Africa?
Property Practitioners Bill – Why Should The Consumer Give A Hoot?
The 3 Worst Reasons To Buy A Home
Avoid These Most Common Pitfalls When Buying Or Selling Property
4 Home Buying Obstacles To Overcome
Be Careful Of Sophisticated Property Scammers When Buying Property
4 Basic Scenarios That Bring On Buyer’s Remorse
Applying For A Home Loan? Key Is A Good Credit Report
4 Important Questions To Answer Whether You’re Ready To Buy A Home
6 Quick Tips When Buying A Home In An Estate
City Or Suburbs: Where Should You Buy A Home In South Africa?
Property Practitioners Bill – Why Should The Consumer Give A Hoot?
4 Top Reasons To Buy a Home In The Summer
When Is The Right Time To Buy Property?
Make an Informed Decision When Buying a Fixer-Upper
10 Common Mistakes First-Time Home Buyers Make
8 Greatest Concerns Keeping Property Investors Awake
What To Do (And NOT To Do) When Looking To Sell Your Home
How Do Your Pets Affect The Selling Of Your Property?
How To Sell Luxury Real Estate
Property Practitioners Bill – Why Should The Consumer Give A Hoot?
Why A Good Sale Actually Starts With A Good Sale Agreement
What Are The Tax Implications Of Selling Your Primary Residence?
5 Unexpected Expenses When Selling Your Home
How To Get Ready To Sell Your Home In Spring
All That Twitters Is Not Sold
5 Expensive Mistakes Made By Home Sellers When Selling A Home
Does An Open Mandate Delay a Home Sale?
8 Tips On Selling an Empty House
Neglecting Home Maintenance Will Damage Sale Price
The Do’s And Dont’s of Selling Your Home
4 Clear Signs It’s Time To Sell Your Home
4 Minimum Insurance Considerations For Body Corporate
Looking For A Rental Property? Make Sure You Are Rental Ready!
Know The Lowdown On Letting Out Your Property
How Much Should You Spend On Rent A Month?
#SmartHomes: The No.1 Tenant Amenity Today Is Wi-Fi
Demand For Rental Properties Rising Due To Low Confidence Levels
What About Pet Ownership In Sectional Title Schemes?
Why Creditworthiness Is Just As Important For Tenants
Factors To Consider When Letting Out Property
New Landlords Need Experienced Agents
The Perils of Rising Consumer Debt For Landlords
First-Time Tenant? What You Need To Know
Average residential rental values on the increase
Is It Possible To Terminate A Lease Agreement Without Recourse?
New Generation Digs Now On The Rise
3 Helpful Tips For a Stress-Free Moving Day
Divorcing And Need To Sell? 3 Possible Options
5 Mistakes To Avoid When Relocating
7 Tips For Packing And Moving Quickly
Moving? Things To Think About!
Maximising Small Spaces
7 Tips To Help Your Children To Adapt To The Move
What To Do With Your Home When You Have To Relocate
Moving With Pets Can Be Tricky
Estate Agent Moving Tips
Telltale Signs You Need A New Home
Seven Signs You Need A New Nest
Über Wealthy On The Increase And On The Move
Applying For A Home Loan? Key Is A Good Credit Report
SA Property Market Remains Safe Haven Asset For Investors
What Are The Tax Implications Of Selling Your Primary Residence?
5 Unexpected Expenses When Selling Your Home
8 Greatest Concerns Keeping Property Investors Awake
Running Behind On Your Home Loan Repayments? Here’s What To Do!
5 Financial Tips To Stay Afloat As a First-Time Homeowner
First-Time Home Buyer? How To Avoid Tax And Get Up To 44% More Space
Repo Rate Cut: Encouraging News For Home Buyers
Is Investing In Property During The Recession Still A Good Idea?
4 Hot Tips For Investing In Student Accommodation
Make Your Bond Work For You
Energy-Saving Tips For Your Home This Winter
Costs To Consider When Investing In Property
Smaller Properties Yield Great Investments
5 Reasons You Should Work With a Real Estate Agent
Is Hosting Your Property On Airbnb Legal?
How To Protect Your Commercial Property Investment
Commercial property still important asset class for private buyers
Know The Risks Before Building Airbnb Castles In The Sky
Green Buildings Catching On In South Africa
Digital Disruption And The South African Commercial Real Estate Market
Can You Run A Business From A Sectional Title Home?
What’s Driving Change In The Commercial Property Sector?
5 Ways Commercial Property Space Planning Can Save You Money
Investing In Commercial Property an Attractive Option
3 Obvious Signs That It’s Time For Office Relocation
3 Things You Need To Know Before Buying Vacant Land
Price Correction In Commercial Property Market
South Africa: Evolution of Industrial Properties