select
|

Homebuyers who snooze now will lose

Although it’s relatively difficult to obtain finance at the moment, prospective homeowners should not be dissuaded from trying to buy a property – for one very good reason.
 
And this is, says Harcourts Africa CEO Richard Gray, that the current buyers’ market will not last forever. “The property market has always been cyclical, providing the opportunity for those who have the courage and foresight to buy when it is in a down phase to reap bigger rewards than those who wait to buy until the market is on the upswing.
 
“On the other hand, those who wait until an upturn is underway risk losing out because it will become more costly to buy - and even more difficult to qualify for a home loan and afford the additional costs association with a home purchase.
 
“To take a simple example, if you’re interested in buying a home that costs R500 000 now, you will probably need a 10% deposit of R50 000 and about R22 000 for costs. Your monthly repayment on a loan of R450 000 will be some R4100 a month (at an interest rate of 9%).
 
“But if prices were to rise just 3% in the next 12 months, that same home would be priced at R515 000. You would need a deposit of R51 500 and about R24 000 for costs. And even assuming that interest rates had not also risen in the year, your monthly repayment would increase to R4200.”
 
What is more, he says, the higher the projected monthly repayment, the harder it becomes to qualify for a home loan in terms of the affordability ratios used by the banks.
 
“Roughly speaking, you would need to earn just under R13 700 a month to qualify for the bond on the R500 000 house in the example above, and about R14 000 to qualify for the bond on the same house a year later. And this once again assumes that interest rates would have stayed the same which, quite frankly, is unlikely to be the case.”
 
Gray also notes that these calculations take no account of the value of the monthly rent tenants are paying, “but on this score it is worth saying again that if you're not buying a home for yourself, you're buying one for someone else – and putting them in a position to benefit from the next market upturn.”
 
ISSUED BY HARCOURTS AFRICA


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    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