Real Estate Investor Magazine South Africa November 2016 | Page 32

FINDING

The Property

Price Tag
Location location location
BY ANNE PORTER

L

ocation has long been held as the most crucial
consideration when purchasing a property.
When you buy a house, you’re not just
acquiring a home, you’re buying the neighbourhood
too. Moreover, the area affects the asking price of the
property.
There is a multitude of reasons for this, one of
which is that property buyers pay a premium for good
views, quiet surroundings and proximity to facilities
for education, transport, worship, healthcare,
shopping and recreation. In South Africa, security is
a key consideration with areas that have lower crime
rates and greater safety records attracting higher
prices than others. Neighbourhoods with these
characteristics also drive demand. Consequently, as
the law of supply and demand dictates, when there is
high demand for a particular product, the price rises.
Similarly, if there are a lot of properties for sale in a
location, the market will drive prices down compared
to a similar neighbourhood with few properties for
sale. In terms of receiving a return on your investment,
buying the worst house in the best area you can afford
has often been touted as sage advice, in reality this
strategy has had mixed results. It is highly unlikely
that the more unkempt properties will outperform
the best ones unless there is a drastic change such as
major investment and renovations in the homes that

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NOVEMBER 2016 SA Real Estate Investor

need it. Factors such as condition, view and demand
for the type of property will also influence the change
in price of the lower value properties. Important to
note though, is that the more affluent the area, the
worse the worst properties perform. What’s more,
when valuing properties, agents consider what similar
properties within the same area sold for and use that
as part of their estimations.
Although the area as a whole does have an impact
on the price of a property, she advises keeping the
following in mind: A property on a quiet street
within a residential area will attract better prices
than a similar property in the same area but located
in busier streets. In addition, when it comes to highrise residential buildings, the higher the apartment,
the better the view and thus the more valuable the
property.
Whether you are buying a property as an
investment, a lifestyle upgrade or both, one of the
most important decisions you will make is its location.
Not only will this help determine the future value of
your return, but also the many facets of your everyday
life. Ultimately, however, you get what you pay for.

RESOURCES
Knight Frank
www.reimag.co.za