It's so easy to get caught up in the joyful madness of the holidays and most of us dream of living in a beautiful place in which we can create treasured memories. However, anyone who is considering buying a property off the beaten track needs to do just as much homework as they would if they were buying a primary residential property in one of the larger centres.
While we may be in touch with current property trends in the suburbs in which we live, things can be totally different in outlying “country” areas. Although most of South Africa's property market felt the effect of the economic fallout to a greater or lesser degree, some were far harder hit than others. This generally happened in areas that thanks to the boom, had seen the price of residential property soar. There were many instances where prices literally doubled in a very short space of time. The adage “what goes up, must come down” proved to be particularly true in these instances and when the economic crisis hit, the effect on these areas was nothing short of devastating.
In certain areas investors who had bought at the height of the boom saw the value of their investment decrease by 50% or more. Even those who could afford the financial knock struggled to sell as the market was flooded with a glut of properties.
For most of us, the economic crisis has faded to a distant memory and prices throughout the country have generally recovered. Things are also looking rosier for those selling in outlying areas and although prices are often still way below those attained during the boom, the demand for homes in these regions is growing.
The problem is that while property in these areas may seemingly be going for a song, when compared to property in the larger urban centres – and taking local market conditions into account – they could still be regarded as being overpriced. This of course shouldn't pose a problem for those who are looking at a long-term investment, but it could have drastic implications for those who are looking to own the property in the short- to mid-term.
For this reason it is highly advisable to speak to local agents in order to get a feel for the prevailing conditions. Buyers should request a report showing how many properties have been sold over the past year and the average price attained by sellers. This will give buyers a fair sense of what is happening on the ground and allow them see which properties are truly well-priced.
Buyers should also take the time to find out about crime levels in these neighbourhoods. Although crime was traditionally a lot lower in country areas, this is beginning to change. There are always going to be risks associated with leaving a holiday home standing empty for large parts of the year, but this is obviously less problematic in areas that are well policed and where crime levels are still under control.
There are an incredible number of benefits to owning your own little place in the sun and there are often still bargains to be found. Do your research and buy in the right area at the right price, then sit back and watch your investment grow.