How to buy a distressed/repo property?
Now is a good time to buy distressed and repossessed properties thanks to low interest rates and available stock in the property market.
Brad Allen, distressed property specialist from Investment Property Specialists (IPS) says the property cycle is currently experiencing tough times and growth is expected to pick up towards the end of 2012 depending on the global economy.
“The lack of financing to buy property for many is hampering growth, making this a buyers’ market for those who can afford it.”
On distressed property sales, he says he has negotiated deals from 50 to 80 percent of bank valuation (not market value) for buyers and this is dependent on area, price bracket and demand for that type of property.
Understanding the difference between a distressed and repossessed property?
Trend is towards smaller homes
The trend is towards smaller home designs which are in every way less expensive.
Those who in future years review SA housing trends will look back on the current period as a time when house sizes were cut to levels that had previously been thought non-viable, says Tony Clarke, MD of Rawson Properties – and the good news, he adds, is that this has been achieved without too much disruption of family life.
Clarke says fifty years ago a standard middle class home had 1 ½ bathrooms, three bedrooms, two reception rooms, a garage and 85 to 140sqm of floor space. When the economy picked up and the housing market found itself in boom times, typical house sizes rose to 140 to 150sqm. Now, however, the typical newly built home will probably have less than 90sqm and CBD apartments in Johannesburg and Durban can be as small as 30sqm.
The trend to go smaller is driven by the lack of cash among buyers, says Clarke.
Expect no further interest rate cuts
It is unlikely that the South African Reserve Bank Monetary Policy Committee will cut interest rates during its last meeting for the year.
Samuel Seeff, chairman of Seeff Properties, does not believe that consumers can look forward to any further interest rate reductions.
He says the Reserve Bank has been conservative in their monetary policy and given the upward inflationary trend and continued fuel and utility cost hikes, this would send the wrong message to the market.
“While a rate cut will improve affordability and help reduce consumer debt levels, it is unlikely to stimulate any significant demand push,” he says.
The historically low interest rates have done very little to encourage any significant participation in the market by investors and top end buyers this year.
Home extensions cheaper than moving
When a home becomes too small for a family’s needs, an obvious choice is to move to a bigger house.
But it is often more sensible and indeed cheaper to extend the existing property simply by building on additional rooms.
More and more people these days are abandoning the idea of moving to a bigger home when they run out of space, choosing to build on to their current property instead. Of course, people’s needs vary – some want two-storey extensions or an ambitious loft conversion, while others need only an extra living room to give them some much-needed breathing space. But whatever the requirement, a home extension is a big project that needs careful consideration.
It is important to analyse your situation carefully to decide just what sort of extra space you need. Perhaps the most obvious requirement is an extra bedroom to cope with an addition to the family. You may have a house with just one living room, and feel that it cannot cope with all the different activities of the family.
New energy regulations for buildings
All new buildings and all extensions to existing buildings in South Africa must conform to the new regulations on energy conservation as from 9 Nov.
He explains that with effect from November 9, all new buildings and all extensions to existing buildings must conform to the new regulations recently published, especially the new regulation XA.
“The provisions of this regulation are far-reaching and will change the face of the architectural and engineering industries and cause major adjustments to conventional construction norms.”
All new building work will need to be designed in such as way that they use energy efficiently. They also need to fulfil the needs of the occupants in relation to lifts, escalators, thermal comfort, lighting and hot water.