Homeowners thinking of selling their home because of the increased municipal rates and possible further hikes in the bond rate should not panic, because they could be jumping from the frying pan into the fire!
That's the advice from Russell Scorer, joint managing director of one of South Africa's leading real estate companies, MaxProp.
Scorer said he understood the temptation to bail out because of the rising costs attached to home ownership but warned the rental option probably offered little respite.
"You can be sure that landlords are going to up their rentals to cover their increased costs - so by renting you will be covering the owners' rates and bond cost rises! "
"What must also be kept in mind are the costs of selling - there's the estate agent's fees, entomologist and electrical clearance charges, possible capital gains taxes and other relocation costs. "
"Then if you want to get back into the market there's another whack of costs waiting - including conveyancing fees, transfer duties, bond costs and - what many people forget - the possibility you won't be able to get the size of loan you want because of the stringent National Credit Act requirements," said Scorer.
"Home-owners need to weigh up all these aspects before selling in haste."
Scorer believes it possible the interest rate would increase by another 0,5%.
"I don't see this as too much of problem when one considers that just four years ago the rate was 17%."
The new National Credit Act had impacted significantly on would-be buyers' ability to get the size loan they wanted. "We lost five deals in just one of our branches last month because of the Act's requirements. I think many people are ignorant of how the act works. For instance, you may have a credit card with a zero debit balance but it still impacts on your credit worthiness because when you are assessed the credit balance you have available is what is taken into account."
Scorer thinks the new municipal valuations in the Durban area had been reasonable. " At least 60% of the valuations that have been brought to my attention have been accurate, but obviously there are those that may be challenged. "