While the key concerns for many first-time buyers entering the property market are affordability and how close the property is to their workplace, Adrian Goslett, CEO of RE/MAX of Southern Africa, says that buyers who have sold their first homes and are trading up, are more concerned about the features of the home, its design and more importantly, its location.
Goslett says that when first-time buyers were asked by estate agents what their main reason for selecting a particular property was, a large number cited price as the primary contributing factor, as well as the fact that the property was proximate to their office. “While many buyers may want to purchase their dream home straight away, they are not able to do so as affordability remains a key aspect in today’s property market. The majority of consumers understand that market conditions are ideal for purchasing property and want to get their foot in the homeownership door sooner rather than later.
However, a large number of potential buyers are still struggling with high debt-to-income ratios and don’t have deposits saved up. This has an impact on their affordability levels, which in turn impacts on the size of bond they are able to obtain from financial institutions, which affects the size and type of property they can afford to buy,” explains Goslett. “It is also understandable that more first-time buyers are looking for property that is close to their place of work. With the increasing cost of fuel, impending e-tolls in Gauteng, along with the fact that South African roads continue to become more and more congested, people are continually looking for ways to avoid time-consuming and expensive commutes. We have also seen an increase in demand for property that is close to public transport nodes as many consumers are opting for alternative ways of travelling to their place of work.”
According to Goslett, trade-up buyers who were asked the same question cited design of the home as their determining factor when selecting a property, followed by the neighbourhood in which the home is situated. “Depending on when they purchased their initial home, trade-up buyers will often have much larger deposits that they can use to put towards the purchase of their next property. While price is of some importance to these buyers, due to the fact that they have had the opportunity to build up equity in their previous home, they are able to focus on other aspects that are important to them,” says Goslett. “Many trade-up buyers are looking at purchasing a home again because their current property no longer meets their requirements. It is for this reason that aspects that they may have previously compromised on, such as the number of bedrooms or size of home, is of more importance to them moving forward.”
Goslett says that many trade-up buyers are looking for newer homes with energy-saving features. He notes that a growing concern for the environment along with the anticipated hikes in electricity tariffs of around 25% per annum, has resulted in many buyers wanting property that features green elements in the design. This follows trends seen in the US where nine out of ten buyers would prefer to purchase a home with energy-efficient features and permanently lower utility costs, rather than a home without those features that costs 2%-3% less.
He also points to security features as a major aspect that trade-up buyers are looking for when selecting their property. “South Africans are no doubt among the most security conscious people in the world. Properties situated within secure estates and those with state-of-the-art security systems are generally sought-after and have a greater return on investment. Many buyers are prepared to pay premium prices for homes with these features,” says Goslett.
He concludes by saying that no matter what a buyer’s preference or reason for selecting a certain type of property, those with access to finance will find what they are looking for in today’s real estate market.