Check out an area before buying

Isaac Moledi

Isaac Moledi

Regularly released data from major banks can make it easy to keep track of what the local housing market is doing, but how do you find out if a particular area is good or bad?

If you're a buyer, doing your own analysis can make the difference between buying into an area that is on the up, and buying into one that is on the slide.

What are the give-away signs?

Saul Geffen, Mortgage South Africa's chief executive, says: "One of the biggest indicators of an area on the way up is a growing number of estate agencies opening in it.

"The agencies are looking to cash in on likely growth."

Geffen said the way estate agents market their properties is also telling.

"The more aggressive their advertising, the more confident they are that they will be able to sell or let."

He advised people to check the property sections of newspapers and magazines as a guide to an area's popularity.

"Popular areas often have fewer listings because people prefer to sit on scarce property in high-demand areas.

"This leads to a lack of supply and prices tend to do very well in high-demand areas."

Geffen said that a particularly strong signal that house prices are booming is "gentrification".

Gentrification is the conversion, over a number of years, of less developed and desirable areas into thriving neighbourhoods occupied by professionals and young families.

Geffen says it starts with the arrival of people in creative occupations who are attracted by features such as run-down period properties, derelict warehouses or proximity to a town centre.

"Following their arrival small independent delis, coffee shops, news bars, an estate agency or two and chain stores open."

Geffen said that the signs of a stagnant market are not always easy to discern, but that indecision and stalemate are the most obvious symptoms as buyers and sellers stick stubbornly to their guns.

"Homes could be on the market for long periods."

He said that though an area retained its character, the number of businesses arriving and new properties developing started to tail off.

"There will be more 'For Sale' boards in a falling market.

"Buyers tend to be in the driving seat and make lower offers on properties."

Geffen said fewer people renting in an area is another big sign that house prices could be falling.

"More generally, house prices tend to fall when unemployment or the fear of unemployment rises."