Thursday, 23 May 2024
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Durban

Second home sales soar

FNB has revealed that they’ve seen a 46% increase in the total number of buyers who purchased their secondary properties in the fourth quarter of 2020 compared to the fourth quarter of 2019.

Many of the property purchases were made in lower priced rental properties, with 20.6% of the purchases made for properties priced at less than R500,000 and 24% for properties priced between R500,000 and R1 million.

FNB Private Bank Lending Chief Executive, Praven Subbramoney said, “This data mirrors the trend currently seen in the broader property market regarding the increase in secondary property buying in the more affordable segments driven by middle and high income earners who are taking advantage of low borrowing costs and well-priced properties.”

“In addition to low interest rates, the increased demand can be attributed to the savings customers made from not paying student accommodation during the lockdown period and the trading down in this market due to decreased demand.”

Subbramoney said clients purchase additional properties for various reasons, primarily for rental and holiday purposes. For rental property purchases, the purchaser typically looks at properties that fit within their financial management journey and wealth creation aspirations.

“Having said that, student accommodation purchases as well as sectional title properties are in demand due to their lock up and go nature and lower maintenance costs.”

What has also become prevalent is the upward trajectory in investing in this type of property due to the energy and water saving solutions which put money in the investors’ pocket, he said.

“Coastal properties are also preferred for people looking for holiday homes and with the advent of Air BnB, it has made it easier for these individuals to also earn rental income on their holiday homes.”

Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank said, “Building your property portfolio as an investment can be an effective money management tool when used correctly, and in turn cultivate into a wealth creation opportunity for you and your family for generations to come. For our clients, owning more than one investment property can be used to speed up their wealth creation goals and further achieve financial freedom through multiple sources of income.”

Of those who bought secondary properties in 2020 and grew their property balance sheets, 52% were men, and 48% were women. However, the broader home buying picture, still shoes that women dominate the home buying market by a remarkable 53%, especially in the first-time home buyers’ market.

From a regional point of view, 34% of secondary properties were purchased in Gauteng , 22% in the Western Cape and 9% in the KZN, mirroring the economical and job activity in these leading provinces.

“Property represents a stable investment which will grow over time and serve as a wealth creation tool for you and your family for future generations to come,” said Subbramoney.

“If you are looking to enter the property market for a secondary property, remember that property is a long-term investment which comes with monthly costs. Before making the commitment, it is always worthwhile to consult experts who will be able to assist you in the process of turning your property into an investment and advise you on a strategy that will positively impact the growth of your portfolio.”

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