Why right now luxury property is within your ‘buying reach’
In my many years of top-end home marketing, I have not seen heritage homes – and particularly Herbert Baker-designed homes – within easier reach than right now. This is as a consequence of the luxury market dropping more steeply than properties lower down the market.
To take advantage of these, and other opportunities, aspirant buyers should consider a holistic view of their buy / sell process. The concept that the traditionally more expensive houses have taken a bigger knock regarding their value than the less expensive house (middle and lower markets) is valid.
It might be a decade before expensive homes are within reach again as they are now (assuming the market is beginning to turn, as I believe it is). The differential between the value of lower-end properties and those in top-end areas is at its smallest currently. This concept of lower priced properties having suffered less than previously ‘expensive’ properties applies across the market at all levels.
A rare opportunity
Right now, conditions are not normal. The homes market has been flat for so long that the Rand value of expensive homes has dropped more steeply than that of homes in more popular middle and lower market areas.
Consider this scenario: You have a Parkview seller, who is not really a seller, but did sell his property anyway – only to find that the deal failed to go through. Now he is considering taking his unsold house off the market… but he nevertheless still wishes to move upmarket at some stage. So, his choice is thus either to sell at a market related (i.e. lower) price now. The sale will put him within financial reach of a Westcliff home, more expensive than his current house.
Out of reach
Conversely, he may opt to sell in a couple of years’ time, when he will get a better price for his home. But, by then, the pricey Westcliff home he originally had his eye on will have become even more expensive (the differential in Rands) – to the extent that it will, by then, probably be out of his buying reach.
If your aim is to buy upmarket, you may well not achieve the hoped-for price on the sale of your (less costly) home. But, if you take the plunge and sell, it will put you in a position to reap the benefits of the market having bottomed and allow you to purchase the more expensive property at a bigger discount than the discount you sold for. You might not win on the swings, but you will win considerably on the roundabouts.
Off the market radar
The very fact that heritage homes – and, not least, Herbert Baker homes – have moved within wider reach these days is almost ridiculous. They normally don’t feature on the broader market radar. And, when they do, their prices are inevitably beyond the means of all but the very wealthy. I’m sure the same logic applies to any top-end properties in the current market and the discount they are being offered at.
The differential between the value of the house sold to the value of the house bought remains the important number to keep in mind as the market turns.
Author: Ronald Ennik