Buyer's market: Three things to consider when buying in 2020
Category Property Buying Info
Some market sectors may be struggling in South Africa, but when it comes to property, now is a good time to buy, say the experts.
Whether it's as an investor or for your personal residence, getting into the property market is a savvy move.
Some market sectors may be struggling in South Africa, but when it comes to property, now is a good time to buy, say the experts.
A major contributing factor to this is the recent interest rate cut.
South African Reserve Bank governor Lesetja Kganyago announced an interest-rate decrease on 16 January 2020. This drop means that it'll be slightly easier for home buyers to meet their home loan repayments.
So, if you're considering joining the property market or expanding your portfolio, keep these three factors in mind.
It's a buyer's market
"In all likelihood, the buyer's market that we had in 2019 will continue into 2020," said Betterbond CEO Carl Coetzee.
"When supply exceeds demand, as it does in a buyer's market, buyers have a price negotiation advantage, which often becomes the decisive factor in a transaction."
Coetzee said that another advantage of buying right now is that rental properties are also likely to remain in high demand across the country. For investors, this makes buying property to rent it out, a potentially viable revenue generator.
"In times of political and economic uncertainty, many people are more comfortable renting than buying, which bodes well for those looking to purchase property with the intention of renting it out."
Timing is important
Writing for Property24, bond originator company ooba CEO Rhys Dyer said the softer interest rates are a key driver of performance in the 2020 residential property market.
"The decision by the Reserve Bank in January to cut interest rates by 25 basis points will assist home buyers to meet their home loan and other debt repayments and will generate much-needed consumer relief, which hopefully translates into improved consumer confidence."
He predicted that more good news may come as the year progresses.
"Currently inflation is well within the 3% to 6% target range and this, coupled with the recent rand strength, we expect will result in the Reserve Bank dropping interest rates further during the course of 2020."
Banks offering favourable rates
Financial institutions are increasingly offering 100% loans to qualified buyers, while in some instances those with a remarkable credit record are offered more than 100%. The extra money can be helpful for covering attorneys' fees and transfer duties for the property.
According to Rawson Finance, lenders are granting 100% loans in certain circumstances, but Rawson Property Group managing director Tony Clarke said you're likely to get an even better deal if you put in a deposit over and above the loan.
"Putting down a deposit - traditionally around 10% of the purchase price - helps to minimise the risk your bank is taking by granting you a loan," he explained.
"This can have a significant effect - not only on their likelihood of granting you finance, but also on the interest rate they're willing to offer you."
Author: Norma Young