03 Nov 2023
The economy is down, and the interest rate is up. Should you really be buying property right now? The answer is yes. Buying in a buyer’s market offers considerable benefits according to the Seeff Property Group.
READ: Where first-time buyers can find affordable homes and 6 tips to consider when buying
Buy low, sell high is always the ideal when it comes to investing in property. Given that property price growth has just about stalled, buyers are able to find properties, often at similar prices compared to last year depending on the price category and area.
Bear in mind, if you wait for the interest rate to come down before you buy, property prices will start rising again. There is also usually an increase in the number of properties listed on the market which means buyers have more stock to choose from. Properties which might not otherwise have been up for sale might suddenly become available as sellers will now look to offload their properties for various reasons.
When property markets slow down and stock levels increase, sellers usually become more negotiable on asking prices as they look to sacrifice some profit for a speedy sale. Prices then become more favourable. Any property investor will want to buy when prices are more advantageous as it will enable better profits once the market takes an upturn.
That said, even in a buyer’s market, we strongly recommend that buyers make their offers as “clean ” as possible, says Gerhard van der Linde, MD for Seeff Pretoria East. The less restrictive conditions there are the better the chance of it being accepted.
If the transaction is subject to the approval of a bond, make every effort to obtain a pre-approval before you start looking. Do not take the chance of making an unreasonably low offer.
READ: How deposits work for first-time buyers
While price growth has flattened, prices are not falling through the floor either, says Tiaan Pretorius, manager for Seeff Centurion. The price resilience also offers protection for buyers in the long run. Thus, while it is the right of a buyer to make an offer that they are comfortable with, it is also the seller’s right to accept or reject the offer.
If you are a serious buyer, do not waste your time. There is always the risk of another offer being accepted while a low offer is being put forward. Make sure your property is sold before you make the offer. Bear in mind that if you are waiting for prices to come down, your own property’s price will also come down.
Property remains an excellent investment and sales data has shown that if you buy at the right time and hold onto it for long enough, you could benefit from excellent capital appreciation, says Samuel Seeff, chairman of the Seeff Property Group.
How long that period is depends on factors such as location and the economy. It is especially still a great time for first-time homebuyers as the banks are still granting full bonds. When buying though, Seeff cautions that buyers must ensure they can afford the property at the current interest rate and consider what might happen if your financial position deteriorates or another interest rate hike takes effect.
READ: Sectional Title or freehold? What the differences mean to buyers
Byung, renting, selling:
RE/MAX of Southern Africa shares the: (Exploring property transactions: an A-Z guide (published, May 2023).
Asking Price:
The price set for the home, usually suggested by a real estate professional based on a competitive market analysis and agreed to by the seller. Depending on demand, buyers can choose to make offers above or below the asking price.
Bond Originator:
A free service that can help buyers find the best deal on their home loan. Bond originators have several services that will help buyers navigate the bond application process more efficiently.
Conveyancer (also known as a transferring attorney):
A legal professional who will attend to all the paperwork and other legalities that are required for a property transfer to take place.
Deposit:
An amount of upfront cash provided to the buyer upon acceptance of an offer to purchase. The rule of thumb here is roughly 10% of the asking price. A deposit is not a legal requirement but can make a buyer’s offer more appealing and could help the buyer acquire the remaining home finance.
General Valuation Roll:
A document that presents a value upon which household municipal rates will be calculated until a new roll is issued. It is important to check this when it is released to make sure you do not end up paying more for municipal rates than what the home is truly worth.
House Price Appreciation:
A percentage of growth calculated based on average house prices in an area (usually calculated at a national level). These averages can provide an indication of how much more a property will cost in a year’s time. For landlords and tenants, these averages can provide an indication of what a fair annual rental escalation could be.
Interest Rates:
There are various rates at which interest is calculated on debts, including home loans. Consumers should focus on the Prime lending rate, as this is the base rate that banks use when offering loans to consumers. This will either be above or below Prime depending on how good your credit score is.
Off market sale:
When a property is for sale, but it has not yet been publicly advertised or listed on any property portals.
Pre-approval:
A certificate issued by a bank that provides a buyer pre-approval of a certain loan amount, calculated based on what a buyer can afford. These amounts are only 100% finalised after the bank has completed a property valuation and has received a signed Offer to Purchase on a property.
Reserve Price:
The minimum price set for a home when it is sold via auction.
Sole Mandate:
A written agreement that places the responsibility on a single agent for a period of time. It is often far more effective to sign a sole mandate and allow one agent the space to secure the best sale. A sole mandate is also a more convenient option because sellers will only have to liaise and deal with one agent rather than several.
Turn-key property:
A property that is move-in-ready, with no need to do any further renovations or updates.
Unconditional offer:
An offer to purchase that is not subject to any other conditions, such as a home loan or private home inspection, etc.
Zoning: the type of property that can be built on a plot of land. Local planning authorities control zoning permissions.
“There are a lot of moving parts to any property transaction. That is why the real estate profession exists. Property professionals are there to help guide clients through these transactions. Never feel afraid to ask questions if you are ever unsure of anything during the process,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
Property 24 insert on the 03 November 2023