Value in the Property Market

One of the most important aspects of real estate is determining the true value of a property. This is where the comparable value of square metre pricing comes in.

According to Deon Lessing (pictured), marketing director of Betterbond, researching the price of property per square metre in the area where you are interested in purchasing is an excellent way of comparing apples with apples and weeding out sellers who have priced their property unrealistically.

Up and coming areas may have a lower price per square metre, but over a period of time will give the buyer a far greater return on investment than established areas. “Woodstock in Cape Town for example, which is close to very good areas but lags in renovation, may have a lower price per square metre compared with areas of similar proximity,” says Lessing. An older area such as Braamfontein, which is close to amenities, may be worth looking at as prices will typically be more affordable. It is important to note however that these older properties may need remodelling which could dramatically increase the cost of your investment.

Even though properties in an area will generally have a similar price range the unique characteristics of each property should also be taken into account. The buyer should consider the condition of the buildings, layout, age, garages, number of carports, quality of finishes and extras such as a sundeck or a swimming pool. The views from the property and services provided to the area can also influence the market value.

Looking at coastal property, the value will fluctuate with the ups and downs in the market, however investors can still find some good bargains. “Timing is important, but value is currently re-appearing in these areas,” notes Lessing. He goes on to say coastal property is heavily sought after, but that the cost of living is generally higher than their inland counterparts.

When looking for a property that offers value for money, it is advisable to get a deposit beforehand as more and more banks are insisting on buyer equity. This will increase your chances of being approved by the bank and put you in a good negotiating position with the seller. It is important that you are dealing with a reputable estate agent who can help you assess whether the asking price is market related. With the average property taking four months to sell, buyers can take their time to look around and should never rush their decision.

“Value is starting to return to the market and those that aren’t forced to sell and have the opportunity to invest in their first or perhaps second property will find that there are value buys out there,” Lessing concludes.