Many go for smaller homes because they want to, not because finances force them
THE AGE-OLD trend of “buying down” when times are tough has been reinvented by Cape Town buyers who are trading their larger homes for smaller properties because they want to, not because they need to.
This type of property in Green Point is a typical example of the home that those buying down will consider.
Many buyers in the city, as with the rest of the country, are forced to buy smaller homes to cut costs, but a trend in the Mother City is for residents to “buy down” to meet their desire for lifestyle changes, less home maintenance, lock-up and-go convenience, and increased security.
“It is often a case of downsizing your home to upsize your lifestyle,” says Basil Moraitis, Pam Golding Properties area manager for the Atlantic Seaboard, who explains that buying smaller homes does not always translate to paying less.
According to a report released by FNB property economist John Loos, the overall percentage of South Africans citing “downscaling with life stage” as a reason for selling, rose from 13% in 2008 to 27% last year. This continues to be the single biggest driver of home sales, he says.
“This form of downscaling refers of course, or they are ‘swallows’ who live abroad for six months a year.
“They are looking in areas such as Newlands Village. They may be selling for R20 million to R25m and looking to buy for between R9m and R15m.”
Another factor in the buying-down movement, according to Greeff, is that Joburg and KwaZulu-Natal buyers moving to Cape Town are almost forced to scale down due to higher house prices in Cape Town’s suburbs.
Sandy Geffen, executive director of Sotheby’s International Realty South Africa, says that once the domain of middle-aged empty-nesters, buying down has increased in recent years as the recession forces people to cut costs.
“Even if one is not financially constrained, downsizing can free up a considerable amount of money each month that can be used to boost retirement funds, decrease debt or pay for an overseas holiday, she says.
“Lifestyle is another reason people downsize. as more compact homes require less maintenance and free up time.”
For buyers looking to get away from the city, Geffen says Somerset West and the Winelands are often attractive choices, and the Atlantic Seaboard has seen “rampant development” of modern apartment blocks that are popular with downsizers.
“In the southern suburbs there has been a surge in the development of small clusters. These are popular with residents in the area who have lived there while their children were growing up,” she says.
While buying down is a trend, Anne Porter, chairman of Knight Frank Residential SA, says there is still a market for larger homes and no shortage of buyers for homes sold by those scaling down.
She says Cape Town is unique because the market sees demand from locals, people from up-country, especially Joburg, and overseas buyers.
However, Joburg buyers moving to Cape Town are finding larger homes are less affordable than in Gauteng.
“Many buyers want homes close to excellent schools in the Newlands/Claremont/Rondebosch area where properties are, in many instances, quite small.
“Generally better security and lower maintenance costs are key drivers for downsizing with buyers of second homes opting for lock-up and-go convenience.”
Porter says buying down does not always mean buying for less because, for example, apartments in the city bowl and Atlantic Seaboard are attractive options for retirees and those whose children have left the nest, but these are sometimes as or more expensive than their original homes.
In the Atlantic Seaboard, the buying downtrend has “completely overwhelmed” the market in the past three years, adds Moraitis.
“Luxury beachfront blocks on the Atlantic Seaboard have not been able to meet the exceptional demand by buyers.
“Severe water restrictions, with the looming 19% water tariff increase in the Cape Town Metro, and ever- increasing electricity tariffs are reasons many owners downsize their space to upsize their lifestyles.,” he says.
20 May 2017
The Independent on Saturday (Saturday Edition)