The current state of the economy has many people searching for cheaper alternatives on just about everything. While the demand for affordable housing remains high, affordability will mean something different for everyone.
“The word ‘cheap’ is relative. One man’s cheap is another man’s expensive,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “A better phrase is ‘Where is the best value?’ – and that in itself is a complex question because we all have such different needs,” he notes.
How to go about finding an affordable property
According to Goslett, the approach buyers should take when looking for a property should be to identify where they want to be and why they want to be there. “Next, determine what it is you want from the property. Once you have established that, have a qualified estate agent do a comparative market analysis for you of the types of homes you are looking for. That way you can benchmark ‘your ideal home’ against what the market is currently offering and determine for yourself whether the investment is ‘cheap’ in relation to the value you will derive from the investment,” he explains.
There are a few ways to work out how the price of a home compares to others. As mentioned above, having your agent prepare a report comparing homes with similar features within a given suburb is one of the most accurate ways to determine if the home is offering good value for money.
Another way is to consider average house prices in your province. According to the RE/MAX National Housing Report for Q1 2023, the Free State has the lowest median asking price per province of active listed stock on Private Property at just R1,260,000. The North West Province follows behind closely at just R1,295,000. According to Adéle Cillié, Broker/Owner of RE/MAX Legacy, average housing prices in Potchefstroom have remained fairly constant at around R1 million. This is far below the average in SA’s most expensive province, the Western Cape, where the median asking price is at R2,550,000.
The RE/MAX National Housing Report also reveals that sectional title homes tend to cost less than freehold properties, with the average price sitting at R1,331,685 for freehold properties and at R1,115,509 for sectional title homes.
However, it is important not only to focus on where you can find a home with the lowest possible purchase price, but also to consider the areas potential for future profit. “You make your profit when you buy the property, not when you sell,” says Goslett.
In addition to this, Goslett explains that if the value of your property increases because of the areas characteristics and market conditions, you can reasonably expect that other homes in the same area would have appreciated by a similar percentage. “Therefore, while your home has appreciated, should you wish to sell your home and purchase another home in the same area, the net gain is negligible,” he notes.
“The time to make your money is when you buy. Researching the area, the houses on the market and staying close to a good real estate agent will get you some of the way there to negotiating the best deal at purchase. It is then also up to you in how you decide to either maintain or upgrade the home to add value,” he concludes.
Writer: Kayla Ferguson