Expansive living exists only in our rear view mirror... at the moment
Category Blog
Residential property is a cornerstone of lifestyle. And, right now, everybody's lifestyle is changing, to a greater or lessor extent. The Corona-Virus pandemic has imposed, at best, a more frugal, basic way of living across all income groups. In a way it has given a new take on the term 'batten down the hatches'. If lifestyles are changing it is no surprise that activity in the property market has and will continue to be lively. The drop in interest rates has helped to keep property prices level in comparison to those pre-covid. It is likely that while inflation is at around 2 percent and destined to stay low for awhile so will low interest rates. This will continue to encourage buyers, in steady jobs not too adversely affected by Covid, to benefit from the opportunity to buy well. In fact 'the best time in a lifetime'! Seldom in the past have interest rates and property prices combined so favourably for buyers.
Covid-19 has been - and remains - a lifestyle leveller. So much so that expansive living these days exists only in the rear-view mirror. No more flying down to beach parties in Cape Town, exotic tours to Thailand, or skiing in Switzerland. Less eating out; visiting art galleries; attending cocktail parties.
Instead, patience and self-evaluation has become the order of the day. And it is underpinned by the current suitability of our homes, which need to be in sync with our new, less expansive, lifestyle.
Tenants become owners
That is why frugal downsizing, or upscaling to accommodate the extended family, seem to be trending. A more minimal standard of lifestyle, is gaining traction. 'Working from home' requirements and the need for extra help, from grand parents, for home schooling are influencing decisions. And tenants are becoming homeowners.
Against this background, sellers of large expansive homes are feeling increased pressure on their pricing as there is diminished appetite these days for lavish living.
Retirees re-focus
Another interesting observation is that this market is attracting the interest of older, retired investors who normally rely on income from their savings and investments. The returns they traditionally have reaped have diminished considerably as interest rates have dropped - to the extent that retirees are now increasingly re-focusing their investment attention on buy-to-rent opportunities in the homes market. These are currently more likely to deliver better portfolio yields.
For example, a R1-million savings investment will probably deliver a yield of three to four per cent. On the flipside, a R1-million investment in a sectional title unit will produce a yield six or seven per cent after levies and costs.
Furthermore, the cost of living in prime residential suburbs in urban areas these days is also being carefully compared with the now-available benefits of working online from home in smaller towns in rural and coastal areas.
After all, why live in a densely-populated urban area where you pay high rates and taxes, and face more intense Corona-Virus exposure, when you can have an attractive, healthier, and far less expensive, lifestyle in the countryside or at the sea.
More and more people will strive to avoid the threats that lurk in risky areas by seeking out the safest options that allow them to pursue a healthy balanced lifestyle.
In fact healthy, balanced, family orientated frugal lifestyles will be the positive 'take out' from our new adjusted lifestyles.
Author: Ronald Ennik
