Smaller homes with green features draw potential property owners
Affordability, convenience and security are the key factors driving a distinct buyer preference at the moment for homes packed with green features and smart technologies.
This is according to Rudi Botha, chief executive of bond originator BetterBond, who says affordability remains a serious concern for most buyers because they are still labouring under relatively heavy debt loads and worried about rising taxes and the increasing cost of food, fuel and utilities.
As a result, South African consumers are much more conservative spenders than they used to be and are careful now about getting in over their heads.
“Consequently, while the banks are keen to lend to homebuyers and our bond approval rate is at 80%, the highest level since the 2008/09 financial crash, the latest statistics from Absa show the total of outstanding household mortgage balances is currently growing more slowly than it did last year.”
This does not mean South Africans are buying fewer homes – only that they are buying less expensive homes.
“This is confirmed by our own statistics which show that more than three-quarters (78%) of the bonds granted in the past 12 months have been for less than R1.5 million, and that 60% were actually for less than R1m.
“In general terms, these cheaper homes are also smaller, as indicated by recent FNB research showing the average size of new homes being built in South Africa has shrunk from a peak of 203m² in 1974 to around 162m² now – and that accounts in large measure for the current slow growth in home prices (2.9% year-on-year) in spite of a drop in the prime interest rate and increased sales volumes.”
However, Botha says, affordability is not the only reason for the increased popularity of smaller, cheaper homes.
“Changing lifestyles also play a big role. Household sizes are shrinking, so buyers generally need fewer bedrooms. Many homeowners are also short of time so don’t want a large garden or home to maintain. Traffic congestion is also driving a significant shift from the suburbs to smaller homes in urban centres.”
Smaller properties are easier and less expensive to secure, and the effect of this concern can clearly be seen not only in the increasing number of estate developments, but also in the steady growth of sectional title in South Africa over the past 30 years.
In the late 1980s, secure sectional title developments accounted for only 6% of new builds in the country, but today they account for 27% of all new homes.
The trend towards smaller homes is being driven by a growing awareness of what it costs in environmental terms to run a larger home.
“There is rising demand for smaller homes that use less energy and water and are already fitted with green equipment such as heat pumps, solar panels and rainwater tanks. Some banks now have special home loan options for owners who want to retrofit green systems because this definitely adds value to properties.”