Hot demand for affordable family homes
Affordability will remain the name of the game during 2012, says Mark Brickles, Broker/Owner of RE/MAX Ultra Select, which operates in regions Grassy Park, Strandfontein, Zeekoevlei, Muizenberg, Ottery, Lansdowne, Rondebosch East, Plumstead and surrounding areas.
Brickles believes that family homes in the areas he services, which are marketed to the middle-class man in the street, will be in the greatest demand during 2012, particularly those homes that are for sale under the R1.5 million mark.
?In my opinion the affluent areas are?still unaffordable for many potential home buyers and the top end market will remain sluggish due to affordability. Family homes that offer more bang for the buyer?s buck will be sought-after by property investors,? says Brickles.
He says that Cape Town?s southern suburbs below the main road, M5 and railway line will be the areas in which buyers will be able to find these affordable homes. An area such as Rondebosch East, for example, can reflect a difference in price of R1 million or more in most cases, to a very similar property in Rondebosch, even though these areas are only separated by one road.
According to Brickles, the reason that demand for well-priced family homes has increased is due to the fact that they offer buyers the greatest value and lowest cost per square metre. Often buyers looking to buy a small two-bedroom flat of between 50m2 and 60m2, will only pay between R200 000 and R300 000 more for a three-bedroom family home on a 500m2 plot in the same area.
?I believe these homes are currently undervalued because although?many middle-class buyers were interested in these properties, they have been unable to qualify for mortgage finance over the last few years due to high debt levels, which in turn has led to an oversupply.?Now that many of these buyers have significantly reduced their debt levels and are once again eligible for finance, judging by the first few weeks?of 2012, they are flocking back to the property market and snapping up these bargains,? says Brickles.
Adrian Goslett, CEO of RE/MAX of Southern African, says that since financial institutions have slightly relaxed their lending requirements over the last few months, there has been a higher home loan approval rate, with as many as 50% of all homeloan applications being approved. This, coupled with steady, low interest rates and a number of affordable homes available on the market, will see more buyers entering the property market.
Offering some advice to buyers entering the market, Brickles says that due to the increase in demand for property, buyers should arrange for a pre-qualification on their finance to save time. ?This will give buyers an idea of what mortgage they qualify for, and help them determine what monthly repayments they will be comfortable with. It will also narrow the search down to the properties within the buyer?s price range, as well as avoid possible disappointment should the buyer?find a property they like but cannot obtain the finance for,? Brickles concludes.