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How to get ahead of the curve

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It is a good time for first-time buyers to get a foot in the door but do your homework when selecting the area in which you want to invest

Low interest rates and declining house price growth means that aspiring homeowners with relatively small budgets now have an excellent opportunity to get onto the property ladder.

In most cases, though, they will not be able to buy in the most favoured suburbs and will need to settle for a less popular location. Buyers should know how to spot the potential of an area as, even though it might not be a hot spot now, it could one day become one. Similarly, they be aware of areas on the decline. 

With these considerations, the old adage “location, location, location” is key. Neighbourhoods with good prospects will have easy access to highways and will be close to shopping centres, gyms, coffee shops, restaurants and grocery stores, says Scott Allnatt, co-founder and managing director of Shelley Residential in KZN.

Alternatively, if a major grocery chain is moving in to a new area then you know with certainty that they have done their homework and anticipate growth in demand in that particular area. Buyers should also look for developments, he says.

“New buildings, complexes or gated estates being developed, or even many homes being renovated, are great indicators. “Buyers should also look to see if the roads and parks are well maintained and if the homeowners are taking good care of their verges and keeping their homes in good condition.

“This means that the municipality and its residents are financially sound.” While crime is “obviously a key factor”, Allnatt says a neighbourhood that has recently put new security measures in place or has an active and enthusiastic community association – even if it had a past reputation for being a high crime area – would be attractive options if there is an ongoing reduction in crime levels.

The states of the local schools also tell an important story. “If the size of classes is growing, or if it is becoming more difficult to get your child into one of the local schools, then you know that places are in high demand and that should give you the confidence to move into the area.”

Furthermore, he says buyers should watch the for sale boards or partner with a local estate agent to establish how long it takes to sell a home in a particular neighbourhood.

“If houses are selling quickly, and the number of days on the market is declining, then you know that demand in that area is on the rise.” Cowies Hill in Durban’s Upper Highway area is a good bet for growth potential.

It is an established suburb that is being rejuvenated, Allnatt says Areas that are seeing a rejuvenation of retail and commercial spaces are also signs to look out for, says Hayley Vann-Herbert, sales manager at Jawitz Properties in Cape Town’s southern suburbs.

“Typically, it’s the main road in an area where you see improvement first and the residential market then follows afterwards.” She says potential buyers should be wary of areas where the retail or commercial spaces start getting less affluent and there’s a decline in top blue chip retail and commercial tenants.

Echoing Allnatt, she advises buyers to keep an eye on developments in an area as bigger investors would have done their homework. “They will not be investing millions in a project if they are not certain of a decent return. Potential sales prices of these developments will also give buyers a good idea of future value in the area.”

Vann-Herbert says buyers should purchase the worst houses in the best areas they can afford or in up-and-coming areas. They can live in such houses and upgrade them slowly knowing that the area’s value will make it worthwhile.

“If you have your eye on area, but can’t afford to live there, look at surrounding areas,” she advises. “For example, if you love Constantia in Cape Town, then look at surrounding suburbs such as Bergvliet, Meadowridge, Diep River or Plumstead.

If you are drawn towards Claremont and Newlands, consider areas such as Lynfrae, Harfield and Kenilworth.” When assessing areas currently flying under the radar, Dogon agent on Cape Town’s western seaboard Natalie Kock agrees that factors such as developments, retail growth, schooling options, crime levels and property prices should be taken into consideration by buyers looking for areas with potential.

“Some hotspot areas that are popular and will continue to be are Sunningdale, Parklands North and Durbanville. However, Parklands itself has areas that are in decline.”

Aspects such as little or no growth; low rents; unkempt and neglected properties; poor infrastructure; an influx of vagrants; and high crime are warning signs that an area is deteriorating, she says.

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