What's your home worth?
| Most Cape homes have increased by some 100 percent in
value over the last five years, and yet many homeowners haven't realised
Moreover, they're not even sure what their properties will be worth in five years from now.
According to Lanice Steward, MD of Anne Porter Knight Frank, "Every now and then, when we give a valuation... we find that the homeowner is amazed at how the monetary value of his property has increased."
R1m average home
In fact, the rise in property prices has been so pronounced that economists believe that the average home price will climb above R1-million in less than a year.
Steward says, "This is totally realistic: think back 10 years and imagine how most people would have reacted if you had told them that the average SA middle-class home know costs around R800 000."
As an example, homes which sold at around R30 000 in the early 1970s have recently been selling at R3-million plus. In monetary terms, in other words, their value has been multiplied by 100.
"This sounds spectacular but, of course, the increases have done little more than reflect the annual inflation rate over that period."
Does this, however, mean that property is the safest and best investment?
Over the last 35 years, the stock exchange has in fact outperformed residential property. But Steward says this doesn't take two things into account: that the owner was able to live in the home (i.e. save on rental elsewhere) and that homes were usually acquired on a fairly small deposit.
The 'profit' is therefore being made on the banks money.
The example of Zimbabwe
Just how stable the property market in fact is has now been shown in Zimbabwe. Here, with inflation running at 4000 percent per annum, property values are increasing ahead of that rate and people are refusing to sell because the cash realised will never be able to hold its value in the same way as property.
"Property in Zimbabwe is now more expensive than in SA," she says.
"The assertion that within two to three years the average SA home will have a value of R1-million is completely valid. One could go further and predict that by 2017 the average is likely to be around R3-million."
Article from: www.iafrica.com