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Property Talk

Property Talk

Author: Andreas Wassenaar
Date: 2014-02-14
One of the single most important ways a property owner can maintain and grow the value of his property is through a pro-active approach to home maintenance. As estate agents we, on occasion, witness first hand the value destroying attitudes of property owners who do not actively maintain their properties. 

The worst possible thing for a property is to stand empty. In a holiday destination such as the greater Ballito area, where a large component of the properties are second homes, the difference between the properties that are actively maintained and those that are not is remarkable. 

Selling prices can be as much as 20% lower for identical properties, but which are poorly maintained. The residential renovations and maintenance markets have been analyzed and reported on by FNB in their recent estate agent survey and provides for a detailed insight into the dramatic increase in the level of improvements being done by homeowners. 

The survey measures five distinct levels of home maintenance or improvement. These categories include at the pinnacle the percentage of home-owners investing in their properties with a view to adding to the value. 

This is the first prize category and if you are doing this as a home-owner you can rest assured that your property will sell at a premium price in comparison to other similar properties in the neigbourhood, which may not be attracting the same level of attention. 

From a peak of 43% in 2004 this category declined to a low of 3% in the first half of 2013. In the second half of 2013 this category has jumped by a noticeable 15.5%. The next level down is represented by those home-owners that are "fully maintaining their property and making some improvements". This percentage has climbed significantly from 27% in 2008 to 43.5% by the 4th quarter of 2013. The next tier has also improved, namely the "percentage of owners not improving but still fully maintaining their homes". 

This is currently represented by 32.5% of home-owners. The category you do not want to be in as a responsible property owner is the "percentage of home-owners attending to basic maintenance only". 

This category increased from 6% in 2004 to 34% in the 1st quarter of 2009 as the recession hit and has receded (improved) to 8.5% by 4th quarter of 2013. The lowest category and that segment to be avoided at all costs, is the group that "allows the home to get run down". 

Fortunately this category has remained small at around 2%. It is not a good sight to behold a home that fits into this description.  The value destruction can often be avoided with some pro-active work by the owner. 

It would be better to place a tenant rent-free in this type of home than allow the property to spiral downwards. This is often the case with bank repossessions or properties whose owners are in financial distress. 

The end result is that whoever buys the property has to get it at a price well below its intrinsic value to justify the time, risk and effort required to rejuvenate it.

According to Stats-SA the growth in retail sales of hardware, paint and glass products remains buoyant and well above the comparative general retail sales. 

Another encouraging stat is the growth in residential alterations, both as plans passed for future activity (grew by 4.61%) and completed square metres (grew by 23.56%). This demonstrates increased confidence and a willingness by property owners to take a longer-term view.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.