Prime Lending Rate now at 7%, excellent time to buy in up & coming suburbs.

Prime Lending Rate now at 7%, excellent time to buy in up & coming suburbs.

Category Expert Insight

On 23 July 2020 the SARB announced that the Prime Lending rate will be reduced to 7%, a historic low for South Afraica.a This is excellent news for home buyers, new and old. The reduction in the lending rate will make bond repayments more affordable to the average consumer. Low to middle income earners will get some much needed relief. We expect to see an increase in first time home buyers. Applying for a bond has been beyond the reach of many, but not anymore.

Suburbs offering older homes at more affordable price points will have a surge of activity. Properties priced at R1.4 million and less are likely to see an increase in the number of sales. Purchasing a home at R1 million at a bond of 30 years will now be a repayment of R6653 p/m at 7%.

An excellent choice for buyers is Tijgerhof and Sanddrift, diamonds in the rough, what these areas lack in modern design and appeal it more than compensates with potential. Situated directly across from Century City with many of the same benefits as Century City, but without the price tag. The location cannot be beat as Tijgerhof and Sanddrift are sandwiched between Milnerton Central and Century City with direct access to major arterial roads such as Koeberg Rd and Bosmansdam Rd.

Tijgerhof is an older suburb comprising 676 Freestanding homes and 442 apartments. Although there are almost as many apartments as houses they do not occupy much physical land space as the apartments are limited to a small handful of complexes that take up vertical space. Majority of the houses offer a decent home size on sizable erven.

Sanddrift exclusively offers freestanding homes, where there are no complexes and therefore no high density living. Comprising 620 houses. Sanddrift has greater business potential with roads such as Namar Rd, Lisa Jane Rd and Molly Brown Rd perfectly situated to erect branding/offices/lodging directly in view of people traveling on Bosmansdam Rd or Ratanga Road and situated directly across Sable Square Shopping Centre.

In Tijgerhof 60% of the current homeowners have owned for more than 11 years. A third of the recent sellers owned for less than 5 years which indicates investment activity. There has also been a shift towards a younger demographic of buyers within the suburb. Of the long term homeowners only 5% of them are under the age of 35 years old. Whereas the largest group of recent buyers; being 44%; have been Young Adults in that age group. This tells us that the market sees potential for Tijgerhof as young buyers are investing their hard earned money into the suburb.

In Sanddrift we see similar activity where 59% of current homeowners have owned for more than 11 years. However we see an opposite effect on recent sellers, where two thirds of sellers were long time homeowners. Of these sales half of the purchasers were middle aged, which is great news for the area. Young buyers are more inclined to renovate and improve their homes, raising the overall value of the suburb.

These stats come as no surprise as these suburbs are an excellent investment and offer very good returns on quick re-sales. The reason being that the few properties that come into the market can be picked up at an excellent price, due to the age of the homes and renovations needed (a "fixer upper"). These buyers can afford to invest capital into the property for renovations. This brings the property value in line with the suburb value, which somewhat mirrors the property value of the direct neighbouring suburbs, such as Century City and Milnerton.

Author: 7345