THERE currently is an increasing demand for property as the South African population of predominantly young buyers is gaining a foothold on the property ladder. This, together with the low interest rates and zero transfer duty payable on properties up to R1 million, contributed to the increased activity on the property market.
Although this is promising, there are some key aspects to keep in mind before entering this very favourable property market. Property professional Kevin Shelver from RE/MAX Above and Beyond, Uitenhage said the industry offers not just a buyers’ market, but also a sellers’ market.
“Property owners currently get more for their properties than what they think they are worth. This of course also causes a lot of uncertainty as property owners do not know whether they must sell … still hang on and wait another year … or is now the time to do it?”
Shelver therefore said there are five key points to keep in mind before entering the current lively property market.
“Very important is that those wishing to buy property, should first find out what they qualify for. What their affordability is in term of how much they can spend on a property before they start looking for their ideal home,” said Shelver.
“It is pointless looking at a property that you like but cannot afford. This is devastating, so rather make sure what you can afford and then go out and look at those properties in the market.”
In finding out exactly what you can afford on a property, Shelver said prospective buyers should get prequalified through online bond indicators like Betterbond and others to get expertly verified.
Secondly, when a person has a property to sell with the aim to repeat buy, they should preferably first complete the sell transaction. “This is difficult, because what if I sell my property and then do not have a place to stay? But you can add a clause stating that if you do not find an alternative property, your property that is on the market, is not sold. This is to protect the seller from being homeless.”
Thirdly, there are transfer and bond costs applicable when buying a property. Most property owners do know this, but then especially first-time buyers do not take these costs into consideration.
“Decades ago, the transfer and bond costs were added to your purchase price, but nowadays the banks do not allow this anymore. Therefore, you must have sufficient funds also to cover these costs, besides the fact that the banks ask for a deposit as well.”
The fourth key aspect Shelver wishes to focus on is that property owners who still owe the bank money for purchasing a property, need to give the bank three months’ notice when they want to sell that property. “Otherwise you will have to pay a penalty fee.”
Lastly, Shelver said that owing to the current interest rates levels being so low, buyers opt for purchasing properties that might be a bit above what they would be able to afford in the long term.
“They tend to forget that interest rates may be increased again. Then they would be in financial trouble and you would be required to pay your bank more each month in mortgage repayments. My recommendation is to have a financial cushion. Do not go for the maximum or opt for a fixed rate loan,” said Shelver.
For more information contact Kevin Shelver, RE/MAX property professional on 083 534 3054.
