Empty nester syndrome less frequently encountered today
| The residential market for those downscaling is not as buoyant
as it was a few years ago and there are good reasons for this, says
Lanice Steward, MD of Anne Porter Knight Frank.
As has been widely reported, some homeowners are now reluctant to sell, even if they are growing older, because they are not achieving the price they feel their home is worth.
But one equally important reason for their holding on to their homes is that many are now finding that their nests are not, as previously, empty: their children are staying on at home not only while completing their tertiary education but also while starting on their careers.
An exception to this trend, said Steward, are those offspring who have gone overseas for a working experience there are said to be well over 500 000 South Africans now living in London with many considering returning because of diminishing job opportunities.
Those who do stay here, said Steward, find that up to the age of 25 or even later, they simply cannot afford todays rentals or the payments needed for a home of their own.
For the typical middle class young person, R800 000 to R1 million is what is needed to buy a no frills basic home or apartment with the right facilities in an acceptable area, said Steward. Under the new credit rulings, to qualify for a bond on a R1 million property the buyer has to be able to put down a 10 to 20% deposit (R100 000 to R200 000, depending on his exposure to other debts) and to be able to pay in the region of R12 000 to R14 000 per month on his bond. This means that he has to earn R36 000 to R40 000 per month, i.e. he has to be in the top 20% of all South African wage earners. Obviously, very few young people can manage that sort of payment.
Under these circumstances, said Steward, it is often now necessary to stay at home and save to the point where the buyer can put down a larger deposit perhaps 30 or 40% of the total amount and this will also give them time to move up on the salary scale.
Those going overseas, particularly to the UK, she adds, who intend returning to live in South Africa, should try to restrain some of their desires to visit other countries and save a healthy portion of their monthly incomes.
On todays exchange rate even a small nest egg built up working overseas (over two years) will go a long way to securing a home even if you do not wish to live in it yourself, another option is to buy-to-let, as so many young expatriates are doing. There are few better long-term assets in your portfolio. This has been recently highlighted by the global financial crash where property, although also taking a knock, has held its value better than the stock exchange.
Article by: www.rawsonproperties.com