select
|

What buyers need to know in today’s housing market

There is no doubt that homeownership plays a vital role and has become a number one priority for many South Africans, says Adrian Goslett, CEO of RE/MAX of Southern African.

“In many ways homeownership can enhance people’s lives and many have placed a high importance on owning their own property because of this” says Goslett. “For one, those who own a home in a community will often be more involved and plant deeper roots within that community. It also provides a sense of stability as well as freedom in terms of decisions regarding the property that belongs to them.”

He notes that while homeownership has become important, current economic conditions and the housing market has become far more complex than in previous years. He offers some must-know tips for reinforcing some of the best practices to get potential property buyers home-ready:

Consult with a real estate professional

According to Goslett, prospective buyers can benefit from the advice of reputable property professionals to assist them with making their dream of homeownership a reality. Whether it is a local real estate agent who has knowledge of the area you want to purchase in, or a mortgage originator such as Betterbond, a professional working in the property sector daily will have an effective understanding of the current market. They will be able to assist in providing valuable insight by determining your affordability, setting realistic expectations and helping to address some market related questions and the complex process of purchasing a home.

Affordability is the key that opens the door to homeownership

Goslett says that potential buyers will have to objectively assess their financial well-being and their lifestyle and determine what they can afford over the long term. Due to the cyclical nature of the property market, an average minimum period of nine years is required to see the best possible return on investment. It is not just the bond repayments that a homeowner will have to afford, but the general monthly maintenance costs of running the household as well.

“Establishing a relationship with a property professional that can assist buyers in identifying monthly repayment goals, a target purchase price and the types of loans that they can qualify for, based their current financial situation,” he says.

Homeownership starts with a savings plan

Goslett says that in today’s market buyers will need to have cash on hand before they decide they are ready to buy. Once a buyer has settled on their target purchase price and determined what they can afford, they will need to have a portion of the purchase in cash for a deposit and any other additional costs associated with purchasing a home. On average 60% of all home applicants require a deposit to successfully secure the necessary finance to purchase a property. Currently the average deposit required by repeat buyers is approximately 20% of the purchase price of the home and 12% for first-time buyers. “This is a relatively large percentage to have in cash, so those wanting to purchase a property will need to start saving as early as possible,” says Goslett. “First-time and repeat homebuyers will also need cash reserves for less visible expenses, such as transfer costs, moving costs, home repairs, renovations and planned upgrades.”

Understand and improve your credit rating

Why is it important for potential homeowners to improve their credit score? Goslett says that aside from the fact that banks use this score to help establish credit worthiness, it will also have an impact of the interest rate that the homeowner gets from the bank on their mortgage. “This makes it imperative for potential buyers to have a clean record and keep it clean,” he says.

“Consumers are entitled to obtain a free copy of their credit report from each credit bureau on an annual basis. Prospective buyers should obtain these reports and address any discrepancies and take corrective action to improve their score if it’s below par.”

Pay down debt and avoid making major purchases

According to Goslett, potential buyers should try and pay off any debt they have before applying for home finance as having more disposable income will be viewed favourably by financial institutions. He notes that having less debt will also assist the homeowner to meet the monthly bond repayments.  When considering homeownership, it is also vital to avoid making any large purchases such as buying a new car. Goslett says that by avoiding these purchases it will ensure that cash reserves remain high, which in turn will show the lender that the buyer will be able to service the mortgage debt more easily.

Understand your micro-local real estate market

Goslett says that being financially prepared and buying at the right time can save homebuyers money. He notes that this is due to the seasonality and trends that certain markets experience, which can be caused by a variety of elements such as the change in weather or holiday seasons. Watching the local markets and understanding the right time to purchase a property will give the homebuyer the upper hand in negotiating in the current market.

“Navigating the current housing market may be a reasonably intricate process, however being prepared and working with a reputable property professional will ensure that the buyer’s dream of owning a home will be a relatively smooth and positive experience to remember,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
        
    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