Renovations are the rage despite challenging economic climate.
Home upgrades and renovations are continuing unabated in a number of Cape Town suburbs, with owners reinvesting in their homes in spite of months of financial turmoil.
In fact, it is the economic crunch and cost of purchasing new homes that are making people stay put and alter properties to suit changing needs, instead of looking for new homes.
“On the whole, higher transfer duty and capital gains tax, along with general transaction costs, have resulted in more homeowners upgrading,” says Seeff City Bowl agent Michele Apperley.
This trend – for similar reasons – is seen also in the southern suburbs and on the Atlantic seaboard.
Statistics on the national renovations market mirror this, showing owners making value-adding home upgrades.
The “top level” of all the levels analysed in FNB’s Residential Maintenance and Upgrades Property Barometer increased to 22.5% in the fourth quarter of last year from 18.5% in the third quarter.
“We had expected the decline in the level of these costly value-adding upgrades to continue, given the tough economic times, but perhaps such expectation will prove premature,” FNB’s household and property sector strategist, John Loos, said in the report.
This increase, plus a decline in the low category “only attending to basic maintenance”, contributed to a renewed increase in the FNB Home Investment Confidence
Indicator following a few prior quarters’ decline”, says Loos.
Although many owners are upgrading homes to avoid costs associated with acquiring new property, there are some selling when homes no longer meets their needs.
“Homeowners are also renovating to accommodate more family members, or building separate cottages to enter the Airbnb market,” says Colette Jackson, an agent for Seeff City Bowl.
Seeff City Bowl agents Michael Hauser and Doris Ricketts agree, saying Vredehoek and Oranjezicht are popular areas for those looking to renovate older homes there.
On the Atlantic seaboard, Seeff sectional title agents Hilary Bicarri and Bryan Ginsburg say the area is being scouted by potential investors looking to purchase unrenovated apartments in older buildings.
“In particular, Sea Point, Bantry Bay, Green Point and Three Anchor Bay are going through rapid transformation in which existing amenities are being matched to trendy apartment spaces,” Bicarri says.
For the luxury sectional title market on the Atlantic seaboard, the shortage of stock and rising prices are definitely contributing factors for property owners to stay put and rather upgrade. This is seen particularly in Camps Bay, where Seeff agents Pola and Nadine Jocum say buyers have snapped up and renovated older homes, even demolishing to make way for trendy villas.
However, they note there are several properties on the market in the R20 million plus range where owners have overcapitalised and are looking for too-high profits related to improvements made, location and views. These cases serve as warnings to some owners and investors. Another warning is that renovations purely with the view to getting higher prices or yielding better profits are not advisable, says Seeff Property Group chairperson Samuel Seeff.
“Remember tastes differ; renovations may not suit a potential buyer.”
Rather, homeowners should keep up with home maintenance and repairs.
Homeowners on the Atlantic seaboard are updating fixtures and fittings and extending properties, says Basil Moraitis, Pam Golding Properties agent for the area.
“Many renovations are reflective of the increased value of surrounding properties. Renovating older properties in the Atlantic seaboard suburbs is also directly attributable to homeowners here not wishing to move out and the consequent lack of options within these suburbs.”
The southern suburbs are also seeing constant upgrades, says Samantha Nel, Pam Golding Properties agent for the area. “Kitchens and bathrooms add the most value. Renovations with approved plans and to a high specification will obviously assist in achieving top prices for sellers. It’s a good idea to have a look at other renovated properties in the area before deciding on capital outlay and renovate accordingly, so you do not over-capitalise.”
Across Cape Town, upgrades are happening at all stages of home ownership from entry level upwards, says Chris Tyson, CEO of Tyson Properties.
Major alterations, like extensions, are also usually carried out by those unwilling to sell, he says.
For those who are renovating to sell, Tyson advises: “Sometimes we recommend people do renovations before they sell, but without over-capitalising. This would be more cosmetic, such as repainting and fixing taps and gutters.
“If the property looks neglected, buyers will make lower offers as they’ll be concerned about how much work remains to be done.”
According to Jason Shaw, national sales executive at Pam Golding Properties, examples of value-adding alterations include:
* A spacious, modern and practical kitchen.
* Modern and well-designed bathrooms.
* Developing a loft area into a bedroom or study.
* Converting a garage into a cottage, bedroom or office.
* Converting staff accommodation into self-contained flats or cottages which can be rented out.
* Building a patio with built-in braai.
* Adding air-conditioning or heating to the home.