Renewed spark of activity noted in Winelands sales, rentals markets

Renewed spark of activity noted in Winelands sales, rentals markets

Category Property News

The growing challenge of affordability and an increasingly cautious investor sentiment have fuelled the rental market in the Winelands, where enquiries have picked up significantly in recent months after a slow start to the year.

This is according to Chris Cilliers, CEO and principal for Lew Geffen Sotheby's International Realty in the Winelands and Helderberg, who says that the renewed spark of activity is being seen across all sectors.

"There has also been a steady increase in the amount of rental stock available as many owners who can't sell or are not achieving their desired sale price are renting out their properties instead and there has therefore not been a significant increase in rental prices this year."

Cilliers says that the current market conditions have also precipitated another notable shift and, for the first time in many years, there is now a surplus of rental properties in the student market, whilst reasonably priced family homes near good schools are few and far between.
 

Increase in properties up for sale

However, as a result of the ongoing political uncertainty and spiralling cost of living, the converse is true in the sales arena as a growing number of property owners are putting their properties up for sale.

"Savvy investors and visionaries who are willing to ride out the storm now have a choice of good investment opportunities in the area, especially if they are looking to enter the rental market.

"The best investment properties for the rental market are townhouses or clusters close to town centres in Stellenbosch, Paarl and Somerset West where young professionals and families are looking for accommodation."

However, Cilliers believes that many people who are now entering the rental market do so under the mistaken assumption that buying their own home in this sought-after region in the current market simply isn't an option for them anymore.

"Those who are willing to be a little flexible will find that there are still accessible options available to suit tighter budgets and first-time buyers.

"Purchasing a home in Brackenfell or Strand would basically have the same monthly financial commitment as a rental in Stellenbosch and, at the moment, most banks will consider 100% bonds for first-time buyers.

"For instance, a modern three-bedroom townhouse in Strand or Brackenfell will cost between R1.3m and R1.7m, whereas in Stellenbosch, similar properties generally range between R2.2m and R3.5m."

She adds that buyers can further limit costs by buying into a new development as they will avoid transfer duties and incur only a small legal fee.
 

Buying vs renting

Cilliers says that when deciding whether to buy or rent, investors must consider the fact that as home-owners, they would be responsible for rates and levies and maintenance, which would not be their responsibility as tenants.

"However, on the other hand, even though it may take considerable financial discipline initially, the long-term rewards of buying will always outweigh the benefits of renting as you will have an asset that gives you financial credibility.

"And, if you can obtain 100% finance, you are basically using the banks money to make money."

She advises that the best way to determine which is the best course of action is to get a head start on the financial application before even beginning the search for a home.

"Pre-qualification not only affords prospective homebuyers the peace of mind that their credit record is in good standing, it also arms them with the knowledge of how much they can afford to spend and the type of bond deal they can expect from a bank.

"Obtaining pre-approval also gets the application process started, which means that the process can be more swiftly concluded should prospective buyers decide to purchase instead of rent."

Author: Lew Geffen Sotheby's International Realty