Rising municipal property rates and the increasing costs of utilities, security, and maintenance is forcing Johannesburg property owners to sell their large homes and move to smaller units.
This is most evident in the rapid uptake of some new sectional title developments.
Despite challenging market conditions, property sales activity in the city has continued to rise over the past six months, showing that the city is still the ‘engine room’ of the South African economy.
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It is also home to most of the country’s top business leaders, industrialists, and entrepreneurs, as well as an increasing number of affluent foreign investors, says Rory O’Hagan, principal of Chas Everitt International’s Sandton and Hyde Park office, which serves the city’s northern suburbs.
“Ambitious young people from smaller towns and less developed regions also continue to move here in search of employment and a better lifestyle.”
As a result, he says, the office has been achieving more than R100 million worth of registered property sales each month since January. It is also significant that only a handful of those sales fell into the luxury and super-luxury categories, with the majority taking place in the R2 million to R5 million price bracket.
While there is still “strong interest” among buyers who are returning to Johannesburg after moving to less-populated country and coastal areas during the pandemic, O’Hagan says the most significant sales driver in recent months has been a desire among many existing homeowners to sell their larger properties and “right size” to smaller homes. This is in response to rising municipal property rates and the increasing costs of utilities, security, and maintenance.
On the other hand, the market is creating “exceptional purchase opportunities” for individual and corporate buyers who have the means and the desire to acquire larger homes in the most desirable suburbs. Such properties, he states, are sought in order to accommodate growing families, home businesses, and foreign executives working in South Africa on three- and five-year contracts.
With the increasing cost of living coupled with the highest interest rates in nearly fifteen years, Adrian Goslett, chief executive of RE/MAX of Southern Africa, agrees that many bondholders may be looking to downsize to make their money go further.
“Maintaining a largely underutilised property might not make financial sense if some family members have moved out or if the homeowners’ lifestyle needs have changed.”
When downscaling, it is important to be certain that the property you have chosen will suit your current and future lifestyle needs.
“If you are forced to sell in less than five years, which is the window after which you’re most likely to see a return on your investment, you might lose out financially. While homes appreciate in value over time, it is important to bear in mind all the other costs that go with a property transaction – like transfer costs, agent fees, and moving and relocation costs – which eat into the capital you have available.”
If you have decided to downsize though, the best way is to be sure that you’re making the big move to go small for all the right reasons.
“From a practical perspective, the proper way to go about it is to be systematic and organised as you downsize from a larger to a smaller home.”
He shares these five tips for homeowners opting to downscale:
1. Measure both spaces
Be sure to measure your existing furniture to make sure it can fit into the new home. Avoid the nightmare of having a couch that won’t get up the stairs by measuring all possible entrances and exits to make sure you will be able to move the furniture into the home without having to disassemble it first.
2. Buy new furniture after the move
If your old furniture will not work in the new space, wait until after you have moved into the new home before ordering any new furniture. Not only will this give you one less thing to move and save on moving costs, but it also allows you the time to live in the home and get a sense for what furniture will work in the smaller space.
3. Store music and memories in the cloud
Moving to a smaller home often means far less storage space. Photo albums and CD racks can take up a lot of unnecessary space. Tough as it might be, now is that time to move to digital music platforms and digitise photo albums so that they can be stored in the cloud. Keep just a few of the special photos by framing them and hanging them on the walls in the new home.
4. Sort through one room at a time
Look at how much storage space you will have in your new home as a guide for how much you will need to clear out in your current home. It can be emotional to get rid of the items you have accumulated over the years, which is why it is best to work systematically and tackle one room at a time. Begin with rooms you use least and categorise items into boxes marked as ‘must keep’, ‘donate’, and ‘rubbish’.
Keep the momentum going by simply putting the items that you are unsure of to one side. Once you’ve sorted through everything, you can allow yourself the time to go through these items again to decide whether to hold onto them or get rid of them.
5. Turn unwanted goods into cash or kindness
Instead of taking everything you don’t want to the local dump, sell your unwanted goods online. Not only could selling your items help you afford new items for your new home, but others will also be happy to turn your ‘trash’ into their ‘new’ treasures. You could also help out those in need by donating your unwanted goods that are in good condition to thrift stores and charity shops.