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Studying the property market cycles of the past is the best way of catching a glimpse into the property market of the future, says Adrian Goslett.
Goslett says that timing plays a vital role in the return of investment when purchasing property, even though property investment is far more forgiving than other forms of investment. While purchasing investment property is not for the faint at heart, knowing what to look for and when to buy will make the process far less daunting to the novice investor and once mastered could lead to financial freedom.
He notes that when looking at property cycles over the past few decades there is a definite pattern that can be followed over a period of nine years. Every nine years there is an economic downturn which takes on average of 10 months to complete they cycle from the top to the bottom. The bottom of the cycle usual lasts approximately 24 months, followed by a slow solid upturn to the top with a recovery period of about 64 months. “With the South African property market currently in the recovery stage of the cycle, prevailing market conditions including the low interest rates and a vast range of well-priced properties, make this the ideal time for investors to take advantage of opportunities found in the market,” says Goslett.
Since the beginning of 2011, there has been a marked increase in activity in the property market due to a stronger demand by buyers, and so far, the demand for property during 2012 has proven to be even greater than what was experience during 2011. While there are still many properties available to buyers in the market, Goslett says that investors are realising that if they need to strike while the iron is hot. “With the market recovery in full swing it is likely that property prices will begin to rise in the near future and those that don’t make the most of the current market conditions will lose out. More profit can be made from buying property in a recovering market and selling in a boom period, than if the property was bought and sold in the boom period,” he says.
According to Goslett, although a recovering market is the ideal time for investors to purchase property, the same rules should still apply and investors must not rush into any transaction without concluding the necessary research. Certain elements such as location and type of property should always be considered in any market to ensure that the purchaser is buying into an investment that will produce a return in the future.
Having considered all the necessary aspects, well-informed investors will be able to recognise a good deal when they see one. A good market knowledge and idea of what properties are selling for in certain areas, will allow investors to identify and differentiate between an overpriced property and one that is market related. Purchasing a property that is priced outside of the market’s current perimeters will only erode the chances of seeing a healthy return in the long term. “Property buyers that can show the necessary affordability required by financial institutions are bound to find good value-for-money deals in the current market,” says Goslett.
While banks have slightly relaxed their lending criteria, investors will still need to show that they have the disposable income and the required deposit or sufficient collateral to secure finance. In any market, a favourable credit rating will always be beneficial to the investor and allow them to get ahead of the game.
“The cyclical aspect of the property market will always mean that investors will have to contend with the lows, as well as make the most of the highs. However, despite the peaks and troughs property continues to be a sought-after asset that appreciates in value over the long term,” Goslett concludes.
If you would like to speak to a Professional Mortgage Specialist about your lending requirements, please phone Mortgage Plus Bond Originators on:
Complete this short form online
011.327.4489 / 0861 1111 93
morne@mortgagepluscc.co.za
www.mortgagepluscc.co.za
How can we help you – Property Finance – Mortgages?
Buying a home is admin-intensive and we will make sure you know exactly what documents are required for your new home loan or first time buyer loan and when to make the deal happen for you.
What assessment factors do the banks look at?
Affordability, credit worthiness, and property value come into play when we assess your application.
1. Affordability
At this stage, the bank will undertake a comprehensive assessment to determine if the loan you apply for is affordable to you. Your credit history will be put under the spotlight and details of your current credit facilities will be sourced from a credit bureau. This way we can independently verify the instalment amounts for credit cards, vehicle repayments, cellphone contracts and other facilities in your name. It’s a step that has your best interests at heart. We do what we can to ensure you only take on debt you can afford. Never be untruthful about your income or expenditure as it can lead to your application being rejected.
2. Credit worthiness
A good credit history counts in your favour when applying for your home loan. Credit bureaus do not only list defaults or judgments against you but also keep record of good conduct on your accounts. If your conduct shows you to be a good risk client, you may be offered a preferential interest rate. This can save you a substantial amount of money over the life of your home loan. Your application could be rejected if you are considered a high risk client based on your credit history.
3. Property valuation
It is the norm for the bank to conduct a valuation on the home you intend to purchase. This is to make sure the property offers sufficient security for the loan you request and is of the type the bank normally finances. The bank may require you to pay a deposit on certain properties.
On approval of your home loan application, we will contact you to discuss the most favourable rate received from the banks as well as other important details and the terms of the loan. At this stage, I will advise your estate agent that the purchase of the property has been concluded and I will forward the necessary documentation to the attorneys to proceed with the registration of your bond and transfer of the property into your name. The attorneys will contact you to set up an appointment for the signing of these documents.
If you would like to speak to a Professional Mortgage Specialist about your lending requirements, please phone Mortgage Plus Bond Originators on:
Complete this short form online
011.327.4489 / 0861 1111 93
morne@mortgagepluscc.co.za
www.mortgagepluscc.co.za
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