Pretoria empty-nesters and retirees looking to cut their living costs by downscaling from a large family house to a smaller home should do so without delay, says Jan Davel, MD of the RealNet estate agency group.
The reason, he says, is that the average nominal price of large homes (220 to 400sqm) in the metro has increased by 7,6% in the past year, while the average price of medium homes (140 to 220sqm) has declined by 3,7% and that of small homes risen by only 5,6%.
“According to Absa’s latest housing review, that puts the average price of a large home in Pretoria at almost R1,8m currently, and that of a small home at less than half that – or R720 000.
“And that means that owners of large family houses who sell now might well be able to buy their next, smaller home for cash, depending on how much equity they have in their existing home. If they have paid off or nearly paid off the 20-year bond on their house, for example, they could probably realise enough cash from a sale now to buy a cluster or sectional title home in a secure complex outright – or at least to put down a really sizeable deposit.”
What is more, Davel says, downscaling will enable them to immediately start generating savings on maintenance, property taxes, insurance and utility costs that will most likely more than cover the monthly levy in a security development, or be available for further investment to boost their “retirement fund”.
However, he says, there is some urgency, as the Absa figures also show that price growth in the large home sector of Pretoria’s residential market has been slowing down in the past few months, while that in the medium and small home sectors has been speeding up.
“Supply is also becoming constrained, especially in the small home sector where repeat buyers who are trying to downscale often find themselves in competition with keen first-time buyers, and with the relatively low level of building activity currently, there is likely to be further upward pressure on prices.
“Meanwhile, those who are perhaps contemplating a move from an elderly family house to a newly-built smaller home should bear in mind that such homes are currently about 37% more expensive than similar pre-owned homes, and this will cut into any profit they make on the sale of their existing property.”
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