select
|

Take the property plunge and start building equity

Young people planning on buying their first home should not get too hung up on interest rates or market cycles, or they might miss out altogether on the advantages of property ownership.

That’s the advice of Jan Davel, MD of the RealNet estate agency group, who says that in buying a home, as in purchasing shares, market timing is not the only factor that should be taken into account.

“While ‘buying low’ in the stock market is certainly important, the reality is that the most successful investors and investment fund managers don’t rely on being able to buy stocks at the very moment they reach their lowest price, or sell when prices are at their very highest. They also look at factors such as prospects for growth or the sustained delivery of earnings.”

And homebuyers should take the same approach, he says. “Apart from interest rates and home prices, they need to consider variables such as the type of home they want, price trends in the area they prefer, possible renovation costs, transfer costs and the availability of finance, and be prepared to jump in when it seems most of these factors are lined up in their favour.”

Realistically, there is very little chance of achieving “perfect timing” in the property market, Davel says. “Many of those who waited for interest rates to reach their lowest levels in 2014, for example, then found that the major price escalations that had taken place after the 2008 crash meant that they had actually missed the boat on getting the best deal.

“Similarly, those who are standing by now in the hope that prices will come down as interest rates continue to rise are likely to be very disappointed – and should not forget that rising rates will also make it increasingly difficult for them to qualify for a home loan.”

Indeed, prospective buyers should rather concentrate their energies on actually getting into the market and starting to build up equity in their own homes, he says. “First-time buyers, especially, should just focus on finding a home that suits them in an area with good growth prospects, at a price that is within their current loan qualification limit, because their chances of doing so at the moment are relatively good.”

Davel points out that stock levels have risen in many areas over the past few months, giving potential buyers a bigger range of homes to choose from and more room to negotiate price. At the same time, interest rates are still relatively low and the banks are still offering good home loan options to prospective borrowers with clean employment and credit records.

“And while interest rates and monthly repayments are bound to go up and down during the 20-year term of a home loan, borrowers who do take the plunge will find that they tend to average out – while the value of their property tends to keep rising, and gearing continues to work in their favour.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK