Guiding consumers since 2009

It pays to upgrade your home

By Staff Writer
Nicolette Dirk, finance writer,
The level of home maintenance and value adding upgrades has become important from a banking point of view.
This is according to John Loos, household and property sector strategist. During the recession of 2008/9, and in the aftermath, the low levels of maintenance on certain distressed properties had become problematic.

The main reason was because it effectively meant that in many cases homes had not held the value required to fully back the value of the mortgage loan.
“This situation, however, has improved noticeably over the post-recession years, and the FNB 4th Quarter 2013 Estate Survey reported further improvement in agent perceptions of the levels of home maintenance,” said Loos.
The agents surveyed saw a gradual increase in the level of home maintenance since 2009. From 2004, the survey respondents reported a long decline in the percentage of homeowners “investing in their properties with a view to adding value”. 
This percentage reached a lowly 3% (using 2nd-quarter moving averages) of total homeowners in the areas of these agents by the 1st half of 2013, a far cry from the 43% at the beginning of 2004.

But in the 2nd half of 2013, Loos said this category jumped noticeably to 15.5% for the 4th quarter of 2013.
Israel Skosana, head of consumer insights at African Bank said a home renovation is an asset generating investment and builds equity on your property, even when they are carried out at a small scale.
According to Loos the improvement in the value adding upgrades level was the most recent development, with enhancements in the lower levels of home investment/maintenance having steadily increased previously for a few years.
He added that the category one would want to see declining is the category “percentage of homeowners attending to basic maintenance only”, which in effect means the home will “go backward” over time.

This percentage increased significantly, from 6% at the beginning of 2004 to a massive 34% as at the 1st quarter of 2009. Thereafter, however, it has receded all the way back to 8.5% by the 4th quarter of 2013, as many of these homeowners once again migrated to higher levels of maintenance. Loos said home owners, allowing their homes to get run down, remain a small percentage, hovering near to the 2% mark.
Are more people improving their homes? 
In the 4th quarter of 2013, the estimated percentage of homeowners making improvements in order to “sell for speculative purposes” rising from a lowly 3.5% of the total in the 2nd quarter to 8% and 10% in the 3rd and 4th quarters respectively.

However, this remains low when compared to the 24.5% estimate back in early-2006. The overwhelming majority (71%) still do it for their own use, while 17.5% do it because they “can’t afford to buy elsewhere”.
But Loos said the home maintenance and upgrades market continued to get better in the 4th quarter of 2013.
The FNB Estate Agent Survey has pointed to further improvements in the levels of homeowner investment in their homes through 2013.
The noticeable change in the latter half of 2013, however, was a significant rise in the top category of home investment, namely “Value  Adding Upgrades” to properties, whereas prior improvement had been largely in the areas of “percentage of homeowners doing full home maintenance” and those doing “full maintenance plus some improvements”. 
Loos said they will have to observe to what extent these healthy levels of home investment levels can be maintained in the face of rising interest rates.

Recent Articles

Featured Are you entitled to your spouse’s pension after divorce?

Divorce means more than just parting ways with your partner. It may also involve parting ways with your assets. The Divorce Act states that your retirement fund forms part of your assets. This means that it will be considered when dividing up your assets.

Retrenched – what payments are you entitled to?

In the current struggling economic climate, retrenchments are a regular occurrence and not everyone survives the cut. If you find yourself on the receiving end of retrenchment you may have questions about the payments that are due to you.

Do you want to settle your debt?

You may be considering settling your credit account, whether it’s a credit card or various store accounts, now may be as good a time as any. This especially if you have saved, or you received a tax return or salary bonus. 

Can you afford a personal loan?

Taking out new debt is not always a choice. However, if you’re not pressed by a medical emergency or an unforeseen disaster, it’s worthwhile considering whether you can actually afford it. But what does it mean to “be able to afford a personal loan”? What percentage of your income should you not exceed dedicating to it? 


Builders Black Friday Special

Price: R5000
When: Until 29 November 2019
Where: Online

Café Rousse Monday Special

Price: Available on request
When: Mondays
Where: Nationwide

Skye Bar Mojito Special

Price: R55
When: Until 31 December 2019
Where: Johannesburg