Don’t lose sight of the benefits of buying in a new development

We are living in challenging times. A global pandemic has placed our ailing economy under considerable additional pressure at a time when consumers are already dealing with rising utility costs, loadshedding and water shortages in many parts of the country. Moody’s decision to downgrade South Africa to junk status is yet another setback the country can ill-afford.

But property is traditionally viewed as a safe investment option in the medium to long term even during times of economic uncertainty, and there have been some positive moves in recent months that should provide some relief. The latest record 100 basis point drop in the repo rate has taken interest rates down to one of the lowest levels in decades, and this should provide some short-term financial relief to both households and businesses.

So while the full impact of the Coronavirus on the economy remains to be seen, we do know that a tangible asset like property can generate excellent capital and rental returns , in the long run and that it therefore remains a sound investment option, and a hedge against inflation in a country like South Africa

VAT INCLUDED

The inclusion of VAT in the purchase price of a new development is particularly beneficial for first-time buyers and those with budgetary limitations, if one considers that the transfer duty on a R2 million property, as an example, would require an extra R60 000 in cash.

NO UPFRONT REPAIR COSTS

There is of course the pleasure of owning a brand-new property as a primary or investment property that requires very little maintenance, for the first few years, says Louise Varga, Pam Golding Properties area manager for developments in the Boland and Overberg. Repair and maintenance costs add up very quickly, so knowing that your new home or apartment is good to go for at least three years, is a definite plus when it comes to investing in a new development. According to the experts, an apartment should be repainted every three to five years. This could prove to be quite costly, depending on the price of the paint required and additional labour costs. Fortunately, geysers have an average lifespan of about 10 years, so buying in a new development will save you from spending R6 000 on a new one for at least the first few years.

Many new developments come with energy-saving features, such as solar geysers and boreholes. These can be quite costly to install in an older home, so it’s certainly an added bonus if your new development includes this in its offering. At a time when utility costs continue to rise, the long-term savings in terms of energy consumption should also be considered. Also, most new developments offer state-of-the-art security features.

A BLANK CANVAS

Buying off-plan, or in a development that has not yet been built, means you are able to choose your own design, layout and finishes, in accordance with your specific needs. Buying an existing home with an outdated bathroom, for example, would mean an additional cost to renovate.

Many of the new developments embody the live-work-play trend that is gaining traction around the world, says Laurie Wener, Pam Golding Senior Executive of developments for the Cape Region. People want secure, lock-up-and-go living which many of the apartments and townhouses in newer developments provide. As result, these properties are also sought after as primary residences rental stock. The fact that new developments come with various sought-after features, such as fibre connectivity – which allows for remote working, home automation and topnotch security, certainly adds value.

Posted by Anel Lewis