Purchasing a smaller home means more affordability and a better quality of life in a more desirable location, with micro- and co-living trends gathering momentum.
Industry analysis shows that South Africa’s economic outlook is not looking strong, with the July unrest, the pandemic and ongoing energy supply constraints still having negative effects on investor confidence and job creation. Industry experts are united in the view that the favourable conditions are set to continue into 2022, despite the recent hike in November.
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Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett says he hopes any rate hikes in the year to come will, at worst, simply bring buyer activity back to normal volumes, warning that buyers really do need to leave room in their budgets for interest rates to climb.
“In this case, we might start to see an increase in the number of homes entering the market towards the middle to end of the year as buyers become unable to keep up with the repayments on their home loans."
This will then have a negative affect on property values as supply begins to outweigh demand, he warns.
And while ongoing lockdown restrictions caused many to seek out more space after being confined within the home for months on end. While this presents a good option for some homeowners, others might benefit more from what they stand to gain by downscaling - especially those considering affordability in relation to their desired quality of life.
“Living in a smaller space is far more cost effective. Not only will the monthly instalments on a smaller home be more affordable, but owners will also save on monthly rates accounts and maintenance costs. Larger homes often mean running up larger water and electricity bills than in a smaller home,” Goslett explains.
“Smaller homes also mean fewer spaces to clean and less space in which to store unnecessary items. In a smaller home, every square metre is essential. This also means that every room is highly functional, which lessens the chances of having unused rooms in the home,” he adds.
Micro- and Co-living as a trend
Dr Andrew Golding, Chief Executive of the Pam Golding Property group says the co-living trend continues to gather momentum despite initial fears that the pandemic would bring this to an end, further expanding on the functionality of spaces buyers are choosing.
Micro-living developments usually enjoy prime locations near key employment and entertainment nodes in CBDs of major cities and universities – often in areas where development space is highly limited.
This adds to the appeal of these apartments – which are also affordably priced. In addition to millennials and students, micro-apartments also appeal to young working professionals, business travelers, and the newly retired who are downscaling.
Golding says, "A key theme of the pandemic is that businesses need to be as flexible as possible, so co-working remains popular, as does co-living – in micro units with shared living spaces which offer community and reduced costs and maintenance.
The concept has progressed even further with developments like BlackBrick where the monthly rental includes accommodation in BlackBrick developments in both Cape Town CBD and Sandton.
"These and the Neighbourgood developments focus on the creation of community with the accommodation offering as flexible as possible," says Golding.
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Paul Upton, head of Dogon Group Properties, explains that mixed-use developments blend commercial office space with retail and residential living, creating an all-in-one location that is built for convenience.
“But their attraction doesn’t end there: mixed use developments also create exciting investment opportunities with the option of attractive rental returns as most are situated in central urban spaces, so the demand from potential tenants is high.”
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Many homeowners have also learnt the value of living in a suburb that is closer to nature rather than to the office.
“Following the initial hard lockdown, many have chosen to move away from the main business hubs and relocate to the country in search of a more relaxed lifestyle. By purchasing a smaller home, one might be able to afford to live in perhaps a more desirable suburb and enjoy a higher quality of life without being cash-strapped by bond repayments,” Goslett suggests.
“One thing lockdown taught us is the importance of human connection. In the busyness of everyday life, finding the time to connect as a family can be challenging enough without having to find each other spread across the various rooms in the home. Smaller homes force more interaction, which minimises the chance for families to live past one another, as so easily can happen when living in large homes with multiple rooms,” says Goslett.
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Ultimately, homeowners should find a home that suits their unique needs.
“Property is one of the most expensive purchases a person can make. To ensure that these purchases work for you instead of against you, buyers need to view this decision as a medium- to long-term investment. For the best chance of securing a good profit upon selling, homeowners should hold onto a property for roughly five to ten years. This means they need to be sure they can live within the home for a number of years before going ahead with the purchase,” he advises.
"It can be a lot easier to make up your mind after viewing a few options in person. Be honest and upfront with your real estate agent and let them know that you would like to explore various options of both smaller and larger homes. They can then walk you through a few properties and provide you with some valuable guidance along the way."
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