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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White applicants for properties has been consistently less than the combined total of Black and Coloured applicants over the last three years.

The most notable of these trends is that the percentage of White applicants has been consistently less than the combined total of Black and Coloured applicants over the last three years.

The proportion of Black applicants has risen steadily over the last few years, averaging 42% during 2009. However, this percentage has dipped in the first four months of 2010 to 38%.

In contrast, the proportion of white applicants has risen from an average of 43% in 2009 to 47% during the first four months of 2010. The proportion of Asian and Coloured applicants has remained constant since the beginning of 2008, averaging 8% and 7% respectively.

According to Saul Geffen, the downward trend in the percentage of Black applicants in 2010 can likely be attributed to the fact that the tough economic conditions and stricter lending criteria have had a bigger impact on potential buyers at the lower end of the property price spectrum.

The data shows that potential Black buyers make up 60-70% of total applicants for properties valued at less than R500 000. This proportion drops significantly to around 30% for properties valued at between R500 000 and R1 million, and 10-20% for properties valued at over R1 million.

“The stricter bank lending criteria imposed under the NCA has also made it particularly tough for first time home buyers who aren’t able to meet the affordability criteria.”

However, Geffen says that as the economy recovers, the percentage of Black buyers will likely re-commence its upward trend. “We expect to see an increasing percentage of Black buyers in line with the shifting  economic base in South Africa.” 

By choosing Mortgage Plus for a loan, you will get that continual service to make sure you are getting the best deal possible.

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Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za