The current slowdown in South Africa’s residential property price growth provides potential home buyers with the ideal opportunity to get a foot on the property ladder.
Buyers can gauge how fair an asking price is by consulting an estate agent or by purchasing a property valuation report.
However, in order to take full advantage of this opportunity, consumers need to empower themselves with information to guide them on how to make the best possible investment decision.
According to Jenny Rushin, Provincial Sales Manager at bond originator ooba, as the economy recovers, property prices remain reasonable and the effect of lower interest rates is felt, confidence will return to bricks and mortar investments. She says that even though buying a home is fundamental to wealth creation, it is one of the biggest purchases most people are likely to make and they should be well informed when making this decision.
Rushin offers the following useful tips to help consumers navigate the property market effectively:
1. Location, location, location
It is often said that there are only three things to consider when buying property - location, location and location. Property should be an investment which will continue to grow in value in the years to come. Always research an area thoroughly and consider the following when purchasing property:
- Always look at the surrounding areas - what sort of infrastructure exists, how good or bad is the security of the area?
- Ensure that you are comfortable with the commute to work and the distance and time that you will spend on the road each day.
- Try to purchase property in a good school district. This advice applies even if you don't have school-age children. When it is time to sell, strong school districts are often a top priority for many home buyers, thus helping to boost property values.
- Always be on the lookout for facilities that can create unwanted noise or disturbances in the area.
If the preferred area is too pricey, consider buying in an adjoining area. Buying a home that needs some work is another option as this can be done over time.
2. Budget
Before starting to look at properties, calculate how much you can actually afford. Experienced originators can, free of charge, guide you through the mass of paperwork and the requirements of the National Credit Act to work out what to budget for. In addition, the company can also advise you on getting a pre-approved home loan, in order to ascertain exactly what you can afford before starting the hunt.
3. See what's available
Potential buyers should start their search online. Property websites that list nationwide properties for sale, will prove to be very useful. Information with regards to price, the suburb, photos and number of bedrooms and bathrooms will be available on these sites.
It is also worth looking through the local newspapers for the latest listings in your chosen area.
A good estate agent can access invaluable market information before the public, knowing the homes just on the market and comparable prices. Working with a good agent will make the search process much easier.
4. Choosing a mortgage
Although banks have recently eased their lending criteria and will consider 100% home loans, a deposit will increase your chances of your home loan being approved at a favourable rate.
This is where originators are invaluable, as they are able to approach multiple lenders, ensuring a higher probability of approval, as well as securing competitive terms. Their job is to shop your application around at all lenders in order for the banks to compete for your business, thereby securing the best deal possible.
5. Structural aspects of a house
Always consider the following structural aspects before purchasing a house:
- Patent Defects: These are flaws that will be clearly visible on an inspection of a property. They include wall cracks, sagging gutters, broken windows, missing tiles and the like. It is a buyer’s duty to acquaint themselves with the general condition of the property.
- Cracks in the walls: Most homes do have some light plaster cracks, which are not cause for concern. However, large cracks in the walls should be analysed as these could be structural cracks (deep cracks that appear on both sides of a wall), which could impair the integrity of the wall structure and could be a sign of foundation failure or severe structural problems. Repairing these structural cracks could be costly, so ensure that you identify these upon purchase.
- Water pressure and geyser condition: Upon inspection, you should also turn on the taps to check the water pressure and ask the agent to find out how old the geyser is. If it is an old geyser, ensure that it is covered by an insurance policy. When inspecting the house, also check that all toilets flush properly and that the base is free of any leaks.
- Approved plans for all alterations: It is imperative that you consult the local municipality on whether or not all buildings on the property you intend to invest in are approved and fall within building lines. Should you establish post purchasing the property that certain illegal alterations were carried out, you will be liable to rectify these alterations. This will include the costs of applying to the municipality for approval of the plans and if the structure does not conform to municipal regulations, could even result in the illegal structure being demolished.
6. Making an offer
Ensure that you do adequate research on the prices of recent sales in the area and current property market conditions before you make an offer. Buyers can also gauge how fair an asking price is by consulting an estate agent or by purchasing a property valuation report.
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