select
|

The market is ready, are you?

Everyone is saying that market conditions are ideal for purchasing a home: the interest rate is low, banks are back in the game and buyers have more choice now than they did during the boom. The market is ripe for the picking, however just because the market is ready, it doesn’t mean every aspiring homebuyer is.

Adrian Goslett, CEO of RE/MAX of Southern Africa, says that although the majority of the South African population would like to own a property, rushing into the decision and purchasing a property when you are not ready can lead to trouble. He notes that before potential buyers take the leap, they need to do some research and make sure that the decision is in their best interest right now.

 “Property has proven to be an asset class that continuously shows excellent returns on investment, but only providing that the correct procedures were followed. There are a number of benefits to owning a property, such as having a sense of security or the freedom to make your own decisions about what happens to the property. However, along with all the benefits there are also a number of responsibilities and restrictions that homeowners need to be prepared for, such as additional costs and maintenance,” says Goslett.

He gives aspiring homeowners a few elements to consider when assessing their readiness for homeownership:

Affordability

This does not only refer to the monthly bond repayment, but also the monthly rates and taxes along with the maintenance costs of owning a home. “Another aspect to consider around affordability is whether the buyer’s lifestyle criteria meet their budget. In some cases, a potential buyer may be able to rent a three-bedroom property, but will only be able to afford to buy a two-bedroom property. If they require a three-bedroom home, then they will have little choice but to continue renting until they can afford a property that meets their needs,” says Goslett.

Property is a long term purchase

According to Goslett there are still value-for-money properties available to today’s market, however, buyers will need to make sure that they can sustain the repayments and costs over the long term without putting themselves into financial distress. “Although it is impossible to foresee unfortunate circumstances down the road, it is possible to prepare for them,” says Goslett. “Ideally, buyers should have a contingency plan of saving money in an emergency fund to ensure that if they do hit hard times, they will be able to cover their home’s cost for around six months to give them time to sort out their financial situation. Selling the home shortly after purchasing it could result in the homeowner losing money because in order for a homeowner to see a good investment return on their property, they should aim at staying in the property for a minimum of nine years,” advises Goslett.

Deposits and savings

A large percentage of home loan applicants will require a deposit of between 10% and 30% in order to get approval. This means that potential buyers need to save as much as possible for a deposit before they decide to look at buying a property. “Traditionally South African’s have a poor saving culture, which has impacted on the number of consumers who have been able to realise their homeownership aspirations,” says Goslett.

According to the Savings Institute of South Africa, during the period between 1994 to Q1 2012, the household savings rate dropped from 2.7% to -0.2%. This means that South Africans were spending more than they earned in the first quarter of 2012.

Goslett notes that bucking the poor savings trend and putting money away will give the potential homeowner the best possible chances of bond approval and they will also be prepared for the other costs involved with the property sales transaction such as legal fees, transfer duties and homeowner insurance. Speaking to a property professional or a mortgage originator will give the buyer an indication of what these costs could amount to.

Deal with debt

According to statistics from XDS credit data, last year over nine million adults in South Africa had one or more retail apparel accounts and around 38% were in arrears (90 days or more) on at least one of these accounts. Goslett says that where possible, buyers should prepare for homeownership by reducing their debt. He notes that not only will a larger percentage of disposable income be viewed favourably by banks; it will also alleviate some financial pressure each month.

“Purchasing a property should be seen as a long term commitment, and as such, the decision should be given the time and respect it deserves. Owning a property has its benefits and can be gratifying, however buyers need to make sure they are prepared and ready for the commitment in order to reap the rewards,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 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.
        
    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