Is there a case for ‘Smart’ over ‘Spacious’ housing?
First-time home buyers (FTB) are choosing ‘smarter’ homes over ‘spacious’ properties, e.g., typically one, or two-bedroom properties up to 116m². This is particularly true for the youth market, who are battling to secure professional jobs without experience, are exposed to high property rentals close to places of work, and face general cost-of-living affordability challenges, including transport.
Denese Zaslansky, CEO of the FIRZT Realty group, points out that affordability is key for FTBs, “One of the biggest reasons they tend to purchase smaller homes is that there is no transfer duty payable on these properties if they are newly built and bought directly from the developer. On the other hand, bigger homes are more likely to be pre-owned and, depending on price, this could mean that buyers would have to pay transfer duty in addition to a higher purchase price.”
Costs aside, there is evidence that Millennials and Gen Z actively seek smart home tech to be installed in their first-time property purchase, meaning they are prepared to sacrifice space for ‘smarter’ homes. 38% of these generations, says Forbes, have already purchased homes that are considered smart. They are mindful of environmental sustainability, and look for homes that are – or at least can easily be reconfigured to be – smart. They want to be able to control heating, cooling, lights, small home appliances and security remotely. The problem is that buying such a home without these devices already in place can be expensive.
Although internet connectivity is not a new concept, but rather is expected today, what is being demanded is the addition of smart systems beyond the internet fibre connection. “New apartments and townhouses often come ‘pre-wired’ with high-speed internet connections and may even include some smart tech such as lighting, music, and security control systems. This means there is an even bigger saving for FTBs, as they won’t need to retro-fit,” says Zaslanky.
“The reality is, however, that most FTBs are young singles or working couples who are primarily concerned about affordability and proximity to work in order to reduce transport costs. They also tend not to have much ‘fun’ money, which is why they most often buy new apartments and townhouses that don’t require a lot to be spent on décor, upgrades, or maintenance.
There are some, though, that favour larger homes where they can settle down for years and raise a family, and these buyers will often seek out the cheaper, ‘fixer upper’ houses in more suburban areas that they can afford now and renovate over time as their earnings increase,” she says. “But this increases the chance of having to pay transfer duties for purchases over the R1.21-million threshold. This might limit the funds available to retrofit smart technologies,” she believes.
When it comes to the smart features most in demand by young FTBs, they are likely, says Zaslanky, to “prioritise those that offer convenience, savings, security and sustainability. These might include video doorbells, smart locks, motion detection cameras, alarm systems with remote controls, smart plugs and meters to track electricity usage, smart smoke detectors and smart heating/cooling, lighting and sound controls.”
The smart aspect is also a consideration for property investors, she says, because there is near-constant demand from FTBs, single parents, and older folks who are downsizing. This creates opportunities for quick resales or steady rental income even in cooler real estate markets. “Energy-efficient, low-footprint homes are increasingly attractive to eco-conscious buyers, and lower utility costs make smaller homes more appealing to long-term tenants.”
Ultimately, smaller-space living is about trading space for efficiency factors. Right now, buyers of smart homes may not have a myriad of options, but you can bet that it will be a demanded feature in the next 15-20 years.