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Buy while interest rates are low
Now is as good a time as any to buy a home thanks to the slowdown in South Africa’s residential property price growth.
According to Mortgage Plus, as the economy recovers, property prices remain reasonable and the effect of lower interest rates is felt.
Mr AM Prinsloo, provincial sales manager at Mortgage Plus says confidence will return to the bricks and mortar investments.
Would-be home buyers and property investors with cash have an opportunity to get into the property market, he says.
Although the property market got off to a slow start in 2011, estate agents are seeing an improvement in the market.
Pam Golding Properties (PGP) report that sales are being concluded with more people purchasing homes in the more affordable category priced under R2 million.
Last month, Absa Home Loans said affordability remains key in the housing market and more buyers will be looking at smaller and affordable properties.
Carol Reynolds area principal for PGP Durban North and La Lucia says affordability remains the key driver of bond acceptance and that it is imperative to factor household running costs into the equation when looking at buyer affordability.
“Buyers who have the means to put down a sizeable deposit will be better positioned to negotiate with the banks.”
She says in general, one aims for between 15 and 20 percent deposit as banks are beginning to look more favourably on 10 percent deposits.
FNB Home Loans reports a lower rate of household sector indebtedness compared to the previous quarter.
According to the FNB Household Sector and Consumer Update Q2 2011 report, although household indebtedness has come down, there has not been an improvement in the household sector’s saving rate lately.
John Loos, FNB Home Loans property strategist says the household sector does not save enough to fully cover the depreciation of fixed assets in its possessions.
For many households, this translates to lack of money to put down for a deposit towards buying a new home while in others, this impacts on their ability to repay their mortgage loans.
For buyers who have saved money and can afford to buy, now presents a good opportunity as interest rates are at their lowest, he says.
He explains that in the past few years, estate agents surveyed pointed to a greater portion of home owners not doing full home maintenance and the number of those still maintaining their homes or doing any upgrades has declined since the boom years.
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