How living in a gated community affects the value of your house

 ·27 Feb 2018

Research by data group Lightstone shows how living in a gated community can  impact the value of your property compared to buying a house in a more open area.

According to Lightstone, there are a number of reasons why individuals choose to purchase properties in boomed off areas over more open ones, ranging from the appeal of community living to higher levels of security.

One of the biggest considerations is that a boomed suburb may increase the value of your property – but is this really the case, Lightstone asked.

In 2014 government introduced the Security Access Restrictions Policy which enforced certain restrictions on gated communities. These laws were reviewed and reinforced in 2016.

“The effect of this legislation (was) a drop-off in sales for boomed properties,” Lightstone said. The group used affluent Sandton suburb, Bryanston, as a case study on boomed communities.

When considering the average sale price of a closed suburb and areas with boomed estates against those without gates over a period of five years, Lighstone’s data showed that boomed areas are sold at a higher price, but allows for an equal increase. And when comparing the average price per square meter the numbers fluctuate far more:

When looking at the number of bedrooms in boomed vs non-boomed areas, properties with only two bedrooms are sold at a higher price in non-boomed areas; however, homes with five bedrooms increase in average price of up to 109.4%.

According to Lightstone, the average age of buyers in both categories are 49 – 51 years, and average number of years occupying a home in a boomed and non-boomed suburbs is 12 and 14 respectively.

The illustration below highlights whether the average number of years a property is owned is significantly different when the following variables are considered:

  • The owner bonded and took out a further advance;
  • Only took out a primary bond; or
  • Didn’t bond their property at all.

“It is clear that for both boomed and non-boomed areas, the average duration of ownership is similar. However, for both suburb types, average length of ownership is much higher for non-bonded properties and those for which further advances were registered compared to those with only a primary bond registered,” Lightstone said.

“The conclusion in these findings is that there are certainly some benefits of living in a boomed suburb, but factors such as political, economical, geographical setting and historical data should also be considered when comparing a property in a non-boomed area to that of a property in a boomed area.”

Read: Cape Town’s best and worst performing suburbs for property growth

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