Baby boomers set to boost property market

As in Australia, so here at the Cape: the future of the property sector will in large part be determined by the baby boomers, the large numbers of people born some 20 to 25 years ago. This was said recently by Mike Greeff, Chief Executive of Greeff Properties.

“Among middle class South African citizens approximately one-third of the population is now under the age of 25,” said Greeff. “In the lower income groups the percentage is very close to 40.”

This huge youth group, says Greeff, is likely to create a new residential market in SA.

“Obviously, as we have already seen, there will be a call for first-time home buyer units, priced in the middle class at levels from roughly R400,000 to R900,000. To build at this price it will be essential to be more compact and to densify, probably in many cases moving upwards rather than sideways.”

First-time home buyers wanting to get a foothold on the home owning ladder, said Greeff, should take heart : with a 2,5% drop in interest rates likely to take place within the next nine months, if not sooner, these people, he said, will often find that they now qualify for an appropriate bond under the National Credit Act rulings.

“We have to recognise, as they have done in Australia,” he said, “that this type of buyer is usually prepared to live in far less space provided that the design, finishes and features are all “with it” and attractive, and provided the location is within easy walking distance of action areas.”

It is often surprising, said Greeff, how inexpensive features such as a small marble countertop, a two-ring gas stove, a little subtle down-lighting, and a good porcelain tile floor will make a very compact unit wholly acceptable.

Greeff advised those struggling to find an affordable home but still deterred by developers’ prices to look at those homes which are in need of renovation, particularly if they are in an area that is beginning to improve.

“Supposing, say, you opt for a 50-year-old flat in one of the less expensive suburbs for e.g. Observatory. If you devote R200 a month to upgrading it rather than to paying off a higher bond on a more expensive unit it is probable that within five years time you will find that you have increased its value by a good 50% on top of the usual escalation figures.”

A colleague of his, he said, had added significantly to the selling price of an apartment that he put on the market simply by spending R2,100 on Crete-stoning the walls of the living areas.

“We must,” said Greeff, “continue to point out to the growing middle class that a home is the best asset they can acquire, and they should make every sacrifice they can to become a homeowner.”

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