South Africa’s stingy banks and high cost of property maintenance has led to many homeowners downscaling and some people opting to share instead.

Of the most noticeable trend, downscaling has been more frequent with many homeowners looking for less expensive, smaller units with a concomitant falloff in the value of the more expensive homes, he says.

According to Bill Rawson, chairman of Rawson Properties, 2009 to 2011 will go down in property history as a time in which certain trends gained momentum at a pace not seen before.

Of the most noticeable trends, downscaling has been more frequent with many homeowners looking for less expensive, smaller units with a concomitant fall-off in the value of the more expensive homes, he says.

This resulted in some lower and sectional title units being developed with less than 40 square metres of floor area and in new lower middle bracket homes now coming onto the market with as little as 60 square metres of floor space. 

Rawson says these units 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 have been through a period in which price drops in excess of 30 percent were the norm.

“In this market it is still possible that the price drops will be seen but no longer at the levels experienced in 2010/2011.”

He explains that retired folks were hit hard by the situation. Rawson himself wants to downscale but he cannot sell his existing home at a price acceptable to him and is forced to stay on in the larger home.

Properties in the lower priced category are seeing signs of price stabilisation with price growth beginning to match the inflation rate, he says.

He says the dire economic conditions have greatly increased the tendency to share homes. 

What we are seeing in South Africa is also happening in the USA whereby offspring will stay on in their parents’ home for five or six years. 

What we are seeing in South Africa is also happening in the USA where 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, says Rawson.

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, says Rawson.

However, a spinoff of the current situation is that rentals are rising and rent increases are estimated to be now around 8 percent per annum.

He says investors in areas such as Table View in Cape Town are finding that they can often get between 7 to 10 percent return from day one. 

There have been cases where a 12 to 13 percent return is achieved from the outset. 

Rawson adds that farsighted buy-to-let investors are once again building their portfolios and are often faring better than those who stuck to stocks or the money market. – Denise Mhlanga

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