Buy small - and be happy now

Sellers have repeatedly been exhorted in recent months to keep market conditions in mind when setting property prices - but now it is buyers' turn to a swallow a spoonful of reality.

This is the view of Tjaart van der Walt, CEO of the RealNet property group. "Much has been said about educating sellers to drop their prices in order to achieve sales in the current market. But buyers also need to be educated," he says.

Consumers who want to take advantage of the current market and buy property now are advised to keep their acquisitions modest. Van der Walt says this is not the time for consumers to stretch themselves financially and suggests that buyers target properties costing about 25% less than the maximum bond they would qualify for.

"Not only is it easier to obtain a home loan when you can show that you are buying well within your abilities, but it will be that much easier to keep up with your bond repayments. In the second place, a lower monthly bond instalment will give buyers the choice of paying slightly more than required.

"And paying even a relatively modest additional amount on a home loan every month saves an impressive amount on interest over the lifetime of the loan. For most average homebuyers, this is probably the single most effective way of saving a substantial amount of money over the long term."

On the other hand, he says, buyers who elect not to pay more than the minimum instalment will have the advantage of better cash flow - and reserve capacity is no small matter in the current uncertain times.

"Having a bit of money in reserve every month lessens the likelihood that consumers will be wrong-footed by increases in food or fuel costs, or even rising interest rates. We are living in stressful times where everyone should reconsider their lifestyles and aim to live more simply and less expensively.

"It is indeed a good time to buy small - and enjoy peace of mind."

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