Cape crisis for the aged

The critical shortage of retirement accommodation in the Western Cape and waiting lists of up to fifteen years is resulting in investors putting their names down in their early forties. According to a number of retirement specialists, there is a critical shortage of retirement accommodation emerging in the Western Cape.

There are a number of factors contributing to this problem including increased life expectancy and a trend towards earlier retirement within the middle to higher income sectors.

A research survey conducted by the Central Statistical Service revealed that in 1995 the Western Cape had the highest life expectancy of all the provinces in South Africa, at 67.7 years of age, with the national average being 62.8 years of age.

“Many people now have access to improved medical assistance and are able to adopt healthier lifestyles. These people are living longer lives. It is also a known fact that fewer babies are being born every year. This, coupled with the increasing life expectancy of certain sectors of the population, results in a higher percentage of our population being over the age of sixty,” says Billy Rauch, CEO of the Cape Peninsula Organisation for the Aged (CPOA).

There is also a trend amongst those from the higher income brackets to retire earlier.

“In a new retirement development, the Schonenberg Retirement Village, we are seeing individuals and couples as young as 50 years of age looking to purchase retirement accommodation for immediate occupation. These people are seeking a change in lifestyle that only retirement villages like Schonenberg can offer – physical and financial security, healthcare facilities for later in life, social clubhouses, convenience and location,” says Russell Masters, project coordinator of Schonenberg Retirement Village, who has been involved in the development of a range of retirement villages in the Western Cape including Woodside Village, Silvermine Village and Oude Westhof Village in the northern suburbs.

Billy Rauch concurs: “There is a massive shortage of secure retirement villages in the Western Cape and nationally. Many younger couples are realising that they need to plan their retirement early and are applying to these facilities in their forties and fifties. The emerging upper middle class in South Africa is also increasing the number of retirees that can afford premium retirement accommodation.”

As a consequence, there is an acutely increased need for retirement facilities, villages and complexes as more people enter the retirement market earlier.

According to a recent scarce skills study by the HSRC, which encompassed a range of highly skilled professions including managers, educators, nurses, doctors, scientists engineers, academics and computer-related professionals, between 0.5% and 1.7% of the workforce in each of these professions retired over a five year period from 2001 to 2006.

This means that in the highly skilled professions covered by the study alone, nearly 43 000 people entered their retirement years over the five year period.

In the case of the more upmarket retirement facilities, waiting lists can be hundreds of names long and can lead to fifteen to twenty years of waiting. According to Billy Rauch, CPOA villages and complexes have waiting lists up to thirty years long.

“It is vital that people realise the severity of the problem. If an individual or couple only begin to seek retirement accommodation at the age of 50, they will find themselves at a loose end until they turn 60 or 65,” says Masters.

Additionally, property prices in the retirement market are escalating. According to Masters, eighteen to twenty percent increases per annum are not uncommon in the retirement market. With the more upmarket facilities, this can mean anything from a R150 000 to R400 000 increase in price over one year.

“Having worked in the retirement industry since the early nineties, I’ve seen the shifts first hand. I now encourage potential buyers to purchase as soon as possible so that they can benefit from these price increases to avoid becoming priced out of the market,” says Masters.

“I also advise people to invest in the new developments as they are built, provided the developers are stable and reputable and that the village is managed in accordance with the Retirement Act. These new developments do not have waiting lists and usually offer a range of price options to suit various budgets.”

Masters, together with Rick Minchener hosts regular talks on retirement for those planning their own or their parents’ leisure years. For more information call (021) 852 0821 or 083 457 2007.
  

Buying a home? Have it checked

When buying a second-hand car, most people will have it checked by the AA or a mechanic to make sure it is in good working order. So why then, when a property is one of the most expensive purchases a person can make, do purchasers not get their homes checked out properly before they commit to buying?The most common defects in residential homes are found in the roof structure and the foundations. Eric Bell of Inspect-a-Home says many of these are structural defects are severe, but are patched cosmetically and don’t look serious to the untrained eye.

“I recently inspected a 35-year old home where there were serious roof problems. The owner had put a layer of sawdust in the ceiling to prevent leaking when it rained and of course when the sun came out, the sawdust dried up, and no one would be the wiser.”

In many cases the structural beams in roofs are rotten and need extensive repairs but this is a problem that will be discovered only if the roof is properly inspected.

Bell explains that cracks in walls are also a common problem and it is often caused by blocked drainage which affects the foundations. Many sellers then simply use polyfiller to cosmetically repair these cracks, when in actual fact the foundations need to be underpinned.

Underpinning a home is a fairly expensive process where the weight of the building on the foundations needs to be transferred to special pads to stabilise the crack. The plaster then needs to be taken off the walls so that 90° grooves can be cut across the crack. The cracks are further stabilised by metal stitching. The crack is then filled with epoxy and mortar, further strengthened with chicken mesh before it can be replastered and painted.

In one case Inspect-a-Home supervised a repair job on a house that cost the owner in excess of R50k to metal-stitch and repair the cracks in the walls.

Bell talks about a variety of horror stories and although he has been in the business for nearly 20 years, he is still shocked at how trusting people are when buying a home.

“Buyers should not take what the seller says about the condition of the house at face value. They should always have the home inspected by a professional before committing to purchase.”

There was a recent case in which a house in Pietermaritzburg had a huge problem with cracks and the whole kitchen had shifted by 45mm. The engineering report had found nothing wrong with this home before the owner purchased, but now he is stuck with about R373k worth of damages that he has to repair.

The swimming pool area was of concern as no expansive joints around the pool edge or between the pool and the house were installed during construction. Due to normal expansion and contraction, the ceramic tiles laid were guaranteed to crack and de-bond without any expansion joints being installed.

Bell warns that the “voetstoets” clause in many sales agreements protects the seller exclusively and that often, whether maliciously or unintentionally, the seller and/or the agent do not disclose the defects.

Bell says if the buyer can prove latent defects, then the seller could still be held liable for any damages or cost of repairs.

“All those who are looking to buy a property should ensure that the offer to purchase is subject to a favourable report by a qualified inspector. Once any defects have been disclosed to the owner/seller, it is fraud if it is not disclosed to the buyer,” says Bell. 

Black buyers flocking to Midrand

House prices in Midrand are being boosted by a huge influx of black middle class buyers and the advent of plenty of new sectional title stock.Midrand, halfway between Johannesburg and Pretoria, is now rated as Gauteng’s best performing residential area in terms of house price growth. According to latest data released by the FNB Residential Property Barometer average house prices in Midrand surged 33% in third quarter 2007 (y-o-y).

The second best performing area in Gauteng was the Pretoria township of Mamelodi with house prices up 32% over the same period. FNB data shows that Soweto came in at third spot with house price growth of 26%. That compares to an average increase of 14% and 13% for mid-priced properties in Johannesburg and Pretoria respectively over the same period.

Industry commentators say that house prices in Midrand are being supported by a huge influx of black middle class buyers who regard the area as a relatively good value proposition. Demand has also been boosted by the advent of plenty of new sectional title stock over the past two to three years.

FNB property strategist John Loos says he suspects that Midrand’s popularity among black buyers is also linked to the fact that the area has not historically been known to be a white suburb.

Loos says the significant commercial and industrial development that has taken place in the area has no doubt been a further draw card for people who want to live close to work opportunities.

Meanwhile, one of the largest urban residential villages ever developed in SA is taking shape in Midrand. The 1 200ha integrated estate development, known as Midrand Estates, was launched six years ago. The estate will boast 5 000 private homes on completion.

Developer Pinotage Hospitality Group is incorporating three separate estates into one mixed-use precinct that will provide various schools, sporting and leisure facilities to residents. The communal facilities at Midrand Estates, including a clubhouse, a 10-hole golf course, pro-shop, day spa and The Pinotage Café and Wine Bar, will be officially launched next week.

Latest figures from the Knowledge Factory’s SA Property Transfer Guide (SAPTG) show that the popular mid-priced Midrand suburb of Noordwyk fetched house price growth of as much as 42% in the year to end-September 2007. That brings the current average price in Noordwyk to R745 000.

- Joan Muller 

Berea one of the favourites in Dbn

Home to landmarks such as the Botanic Gardens, Greyville Racecourse, the Musgrave Centre and schools of the ilk of Maris Stella, Durban Girls’ College and Durban High School, the Berea/Morningside area remains high on the list of Durban’s most sought-after residential destinations.This is despite market inhibitors such as the spate of interest rate increases over the past year and the National Credit Act (NCA), both of which have had a severe impact on buyer affordability in many parts of the Durban metropolitan area, says Jenny Hodgson of Berea-based Hodgson & Hodgson Estate Agents.

Its property has also become highly prized by investors in pursuit of long-term capital growth, which currently ranges anywhere from 8% to 15%, depending on location and condition, she says. Their interest is particularly intense in the R600k to R1,2m price range, which usually translates to a one or two-bedroom flat or townhouse.

While single bedroom flats are commanding healthy rentals of between R2,800 and R4,500 and three-bedroom units are renting for up to R7k a month, she says it’s the capital appreciation that investors are after, adding that these purchases often take the place of traditional investment vehicles and policies. As a result, investors tend to be happy to subsidise if and where necessary.

The potential for capital appreciation can extend well beyond this range as evidenced on a house Hodgson sold three years ago for R2,7m. She resold it for R6,2m earlier this year, whereupon the buyer subsequently spent another R1m upgrading it.

From a residential perspective, Hodgson says the Berea and Morningside are as popular for their proximity to excellent schools, the Natal University’s Durban campus and the Sneddon Theatre as they are for their wide selection of architectural styles and properties. These range from older blocks of flats, which offer best entry-level value for money despite invariably requiring modernising to grand, colonial-era homes and modern mansions that sit in sub-tropical gardens overlooking the city or the Indian Ocean and come with price tags of up to R12m.

This top-end pricing by no means suggests that this is the ceiling for the area. According to Hodgson their most exclusive listing is a baronial home from yesteryear priced at R18m. Elegantly converted by the present owner into an exclusive lodge for overseas guests, it is surrounded by landscaped grounds and located at one of the area’s most coveted addresses.

Many of the Victorian homes in this stretch of suburbia have been restored to their former character and then reinvented as taverns, restaurants, antique shops and décor emporia, which has depleted stock levels and ensured unflagging buyer interest. Yet, says Hodgson, Gauteng buyers are not as convinced as their local counterparts of the value they are getting for their money, both in terms of location and heritage.

“Gauteng buyers sometimes struggle to reconcile values and property types in Durban with the modern construction of their home province,” she explains.

“For R3m, they expect a second lounge and fourth bedroom as well as swimming pool on a large stand because that’s what they get there for that price. Here - while R3m buys position - it comes in the form of an older home, albeit loaded with character, but with less accommodation and on a smaller stand. What they are looking for would be found in the R4m to R5m price range.”

Quiet, upmarket roads such as Mentone, Sir Arthur and Lambert are, as ever, experiencing good activity with houses changing hands for millions. “If the property is exactly what a client wants, the client will pay the price even if it’s above market value.”

In addition to traditional family buyers, Hodgson reports growing take-up by emergent buyers, high-ranking government officials and entrepreneurs with their own businesses. This buying pool is complemented by sellers-turned-buyers who are upgrading to bigger, more expensive homes, but remaining in the area.

At entry-level, buyers tend to be in their late 20s and early 30s. Affordability driven, their purchases tend to be flats and townhouses in the R600k to R900k price range, where stock is particularly scarce. However, good buys do however come on to the books from time to time such as a two-bedroom flat just off Musgrave Road, which has just sold for R875k. Another recent sale was a two-bedroom, two-bathroom townhouse in Lambert Road for R1,1m.