Why buying in the Western Cape makes sense

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Experts say Cape Town is likely to lead the trend towards the recovery of the property market, partly thanks to people’s ability to work from wherever they like

Q: WE LIVE in what is considered a luxury home – or one at the upper end of the market – and are thinking of selling it in order to downscale. We are not that positive, though, about the state of the housing market. Should we sell anyway and possibly cut our losses or will the market improve?

A: At 45.49%, the largest percentage growth in the number of formal bond grants approved for the 12 months ending August 2021, were for homes with a purchase price of more than R3 million. There’s been a further 38.7% increase in the number of formal bond grants for homes of between R2.5m and R3m.

While much of the bond activity recorded last year after the easing of lockdown restrictions in June was from first-home buyers, we are seeing that buyers at the upper end of the market are also making the most of the low interest rates.

BetterBond’s applications for the 12 months ending August 2021 show an almost 4% increase in purchase price and an increase of just over 5% in the purchase price for first-home buyers.

The FNB Property Barometer says much of the extended mortgage credit is being used to fund the middle-to-upper price segments. – Carl Coetzee, chief executive of BetterBond

Q: As a landlord, I have been under financial pressure due to the state of the rental market. I have managed to hold out but am considering selling my properties. This is not something I want to do but I feel I may have little choice. Do I have any reason for hanging on?

A: Tenant arrears and vacant rental properties are showing signs of recovery. If you can wait it out a little longer, the housing market (and property inflation rates) will continue to recover.

Bowing out and placing rental properties on the market could have an adverse result, especially if sales stock floods the market. – Paul Stevens, chief executive of Just Property

Q: My partner and I want to invest in the Western Cape property market, particularly Cape Town. Our thoughts are to invest in rental properties in the short-term letting market, although we would consider long-term lets for professionals. Does this plan sound like one that could be successful?

A: We’re finally starting to see a glimmer of something at the end of the tunnel that points towards recovery and Cape Town is most likely to lead this charge as it has an incredible value proposition.

Particularly interesting to me is the changing working paradigm, which is set to catalyse a wave of semigration. The protagonist of this trend is the digital nomad, who is essentially an individual able to work remotely and travel or live wherever they choose, for as long as they choose.

Cape Town, which was recently listed among the “best cities for remote working” by Big 7 Travel, has long been a favourite with digital nomads.

James Vos, mayoral committee member for economic opportunities and asset management, recently stated that targeting digital nomads will become part of Cape Town’s new international campaign.

The Western Cape provincial government has formally requested the introduction of a “remote working” visa, which will allow international visitors to stay longer and work remotely while travelling in the country.

For investors, particularly those buying in Cape Town, this means a highly attractive value proposition. I expect a full recovery in the short-stay letting market. – Jacques van Embden, managing director at property development firm Blok

Q: We are embarking on a massive DIY home make-over (with the use of perhaps a few trade professionals) but are worried about making equally massive mistakes – not just in terms of the actual work but the value-add to our property. What are the most important things we need to know or take into account?

A: To help with your project, let me debunk the five biggest home improvement beliefs:

You need to go big or go home:

In general, home improvements don’t give you a rand-for-rand return on investment but if you remodel key features, like the bathroom or kitchen, you can expect to increase the value of your home.

To avoid over-capitalising, do not spend more than 10% of the total value of the property on renovations.

Renovations are quick and easy:

Reality TV has created the myth that you can flip a home in 48 hours with enough budget left for a major reveal but this is not the case. The best way to avoid unnecessary expenditure, both of time and money, is to choose a reputable contractor from the start.

Upgrade in line with the latest trends:

If you love a particular trend, try working it into your home in a way that is easy to change. Avoid trendy permanent materials like countertops and flooring.

Buyers are typically drawn by neutral, neat homes that show signs of careful maintenance.

Swimming pools add value:

Expert consensus is that pools do not add value to your home – or at least not more value than cost. Potential buyers often see pools as a liability as they are expensive to maintain and are seen as a hassle.

If you want a pool, do it because you and your family want a pool, not for the value you hope to gain.

Doing it yourself is the cheapest way to renovate:

There’s a big difference between installing a shelf and remodelling a kitchen. If you run into problems or, worst of all, need to hire a professional to redo everything you’ve done, you will have wasted a lot of money. Leave the big jobs to the professionals. – Graeme Steen, chief operations officer at Kandua.com

Investing in the Western Cape short-term letting market could be wise as domestic tourism improves and the digital nomad trend grows. PICTURE: THOMAS BENNIE/UNSPLASH