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Location is always the most important factor to consider when buying a home, regardless if it is new or existing.
Development dos and don’ts It is often wiser to buy a small property in a good area, than a bigger property in a declining neighbourhood BY BONNY FOURIE bronwyn.fourie@inl.co.za
Q: WHEN it comes to the time to sell our home, will we get a better price if we bought it new – and therefore the new buyers would be only the second owners – than if we sell a home that was not brand new when we bought it? A1: This entirely depends on the current state of the property market. In general, you are more likely to get a better price for a new home as the initial price included transfer and bond costs and these do not have to be recovered in the selling price but should be recovered in the selling price of a second-hand property, effectively either raising the cost to the purchaser (and reducing demand) or diminishing your profit if you do not add them. – Andre van der Merwe, principal of the Chas Everitt franchise on the East Rand A2: This aspect would very much depend upon the maintenance and care taken by the owner. Once the initial warranties have expired there is not a lot of difference, besides the age and condition of the appliances etc. – Paul Upton, head of developments for Dogon A3: This is not always the case. Many older homes have been renovated to a standard that makes them more desirable. It depends on the location, security, amenities and,
ultimately, the buyers’ preference. – Gus van der Spek, chief executive of Aview Properties Q: I live in an established residential area and a new development is being constructed nearby. What impact, if any, will this have on the value of properties in our area in the long run? In other words, will the new development affect the area negatively or positively? A1: In general, a new development increases the value of surrounding areas and property and hardly ever impacts areas negatively. – Andre van der Merwe, principal of the Chas Everitt franchise on the East Rand A2: It depends on the quality of the development. If it is a good one, it will have a positive influence on the whole area. – Charl and Adel Louw, Chas Everitt Cape Town Northern Suburbs, City Bowl and Atlantic Seaboard franchises A3: There is always an aspect of negativity surrounding new developments, given the necessity of ‘breaking a few eggs in order to make an omelette’. However, most often, once the dust has settled, new developments tend to enhance an area and have a positive effect on overall surrounding property values. – Paul Upton, head of developments for Dogon
A4: A new development can certainly increase the value of properties in your area but it could make your current home less desirable to future buyers. Be sure to do your homework here. Compare the size, amenities, features and security. If your home is bigger, with a bigger garden, for instance, then the buyer pool/ target audience might be different. Here you would appeal to older couples or couples with small families or looking to start a family. Identify your differentiator and market your home accordingly. – Gus van der Spek, chief executive of Aview Properties Q: We are looking at buying a home that is being built in a sectional title development. The development is great, and offers all the modern amenities and facilities we want, but the actual area/suburb is not great. We really want a new home but obviously do not want to lose money down the line when selling. Would you recommend we rather buy an established property in a better area or take our chances with this great new development in a not-sogreat area? A1: Location is the most important factor in property acquisition, so rather size down and purchase in a great location. It will always be the better choice. – Andre van der
Merwe, principal of the Chas Everitt franchise on the East Rand A2: Location is always the most important factor. – Charl and Adel Louw, Chas Everitt Cape Town Northern Suburbs, City Bowl and Atlantic Seaboard franchises A3: Weigh up the convenience and reliability offered by a new home versus the possible hassle of renovations required to upgrade the existing, older home. One factor to bear in mind is that the new development will likely attract other developers to similar projects in the surrounding area, thereby elevating the entire precinct – which will result in dramatic price increases. While this may take a little longer, most folks are looking longer term when purchasing a new home, so this aspect could offer the answer. – Paul Upton, head of developments for Dogon A4: If the area is up and coming, then I would encourage potential buyers to invest. However, if the area shows no signs of future improvement, and is lacking in infrastructure, safety and security, then it’s advisable to scale down and look in an established or up-and-coming area to ensure future returns. – Gus van der Spek, chief executive of Aview Properties
