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WHEN IS THE RIGHT TIME TO BUY A HOME?

Ask any estate agent at any time if now is the right time to buy a home and the answer will be affirmative, with all the obvious reasons being offered, such as: it is a buyers’ market, rather own your home than rent, the market is turning, it’s a good investment, and so on. For those currently looking to purchase a home, Hanlie Bassingthwaighte, Pam Golding Properties area principal in East London, offers some insights into the current realities of the situation.
 
“It’s interesting to use the popular area of Beacon Bay as a case in point,” she says. “There are approximately 3 300 households in Beacon Bay, of which 32 percent have lived in the area for more than 11 years, and 33 percent for less than five years. Here the average person stays in a house for six to seven years.”
 
In 2004 the average price for houses sold in Beacon Bay was R549 000, doubling to just over R1 million in 2008. From 2008 to 2010 there was a further 20 percent increase with the result that in 2010 the average price of a house sold in Beacon Bay was just over R1.2 million.
 
Says Bassingthwaighte: “So why do we say that the market has dropped? The telling factor lies in the number of houses sold. In 2007 a total of 398 houses sold in Beacon Bay compared to 198 in 2009, which is practically 50 percent less. An interesting and key fact is that this number increased in 2010 by 30 houses. This indicates we have embarked on an upward trend, albeit gradual. While it is almost impossible to determine and time the bottom of the market, with this indication and the activity currently experienced in the market - and even though we are far off the 2007 levels of activity - we can safely assume that the market has turned in Beacon Bay.”
 
As every buyer wants to make a safe investment, she says there are a few questions that you should ask yourself before buying a residential property.
 
1)      Is the neighbourhood that you are interested in relatively stable? East London as a whole has rendered excellent returns on property. Traditionally this area has experienced a shortage of stock, for the simple reason that East London has not had the massive development that other metropolitan areas experienced at the turn of the century, and therefore, has not had an enormous over-supply of stock.
2)      Do you plan to stay in your home for more than five years? There is consensus among economists that you can probably ride out any downturn in the market and increase the value of your property during this time.
3)      Do you have a good deposit, do you have job security and is your credit rating good? In that case you are bound to find a really good buy as cash (even supported by a bond) is king. Most banks are looking very favourably on those with a good credit rating, a good job and a deposit. If you have to sell a home to buy another, do that first so that you know exactly how much cash you have in hand before you buy.
4)      Have you found the house you want to live in? The house should be located in the right area, well suited for your needs and close to the amenities that you require. It follows that you will be happy there, and if you love it, many others will, so in a strong market your property will probably increase in value more than others. It is the time to buy it.
 
Bassingthwaighte adds: “Looking ahead, I do not believe prices of houses as a whole will come down. In East London the average price in practically every suburb has increased year on year, even during these past three difficult years. According to reports, residential property prices in parts of America are currently at the 2002 level. Our situation is completely different - we live in a stable market where, over a reasonable period of time, you can trust your investment. Take a leaf from any wealthy person that you know. Ask them how they made their money and don't be surprised if they tell you that the bulk is from property investment. If you have been holding back wondering when to buy, you may be missing the right opportunity right now, it is as good a time as any, probably better.”
 
Issued by Gaye de Villiers


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