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Are you really ready to buy?

There are many economic factors that determine whether it’s a good time to invest in property or not.

Are you ready?Global economic concerns, riots, strikes, terrorism and various local socio-economic issues are all contributing to a general feeling of unease which may put off buyers from committing to property purchases. Although local and global sentiment is not exactly flying high, those in the know are still inclined to say that property is a solid, secure investment and that it’s better to get off the fence and commit to a purchase – but only if you’re ready for it. So says Jason Parker who serviced the Krugersdorp and Roodepoort property market for many years as an estate agent.

“If issues such as crime and socio-political uncertainty are putting you off committing to a purchase, perhaps now is a good time to take a step back and take stock of your situation and decide where you want to be in the long term. Yes we have issues but which country doesn’t? Issues aside there is still a lot going for South Africa. For example, our banking and financial systems are generally sound, many enjoy a comparatively high standard of living and the country is imbued with an abundance of resources.

“In terms of purchasing versus renting, there are arguments for both, it just depends where you are in life. If you are ready to put down roots and possibly have a family, you will probably want to purchase a home. However after giving the matter some real thought you may discover that you actually want to go in a different direction entirely and go backpacking for a year in which case renting is probably best. Purchasing a home is not a minor or (generally speaking) short term commitment and shouldn’t be taken lightly.”

Commenting on the current market status quo, Parker says that although comments have been made that South African property is due for a price correction, history has shown that in the long term, property values tend to stabilise and increase.

Adds Parker: “It’s also useful to keep in mind that the property market by its very nature is cyclical and that every cycle has its ups and downs which is why if you are ready to buy, rather do so now with a view to benefitting in the long run, rather than trying to time the market.

“Those who want to get into the property market also need to keep in mind that property is no longer a ‘get rich quick’ mechanism. The heydays of the pre-recession property market are long gone which isn’t actually a bad thing as today’s market is more reflective of a healthy property scenario.”

He adds that it’s worth noting that if you’re not sure which direction you want to move in, chances are you’ll have to resign yourself to the fact that you might have to rent for some time to come as bank lending criteria probably won’t ease up anytime soon. He explains that there’s also a possibility that there will be an interest rate hike before the end of the year which could make things more difficult in terms of obtaining a home loan if you sit on the fence for too long.

“The Reserve Bank’s official repo rate has remained at historical lows for some time now. Such low levels cannot be sustained forever and interest rates will inevitably inch upwards at some point again. Similarly, if you’re holding off in anticipation of a rates cut, the chances of this are slim. Many analysts believe the central bank would be loath to cut rates in an environment where wage demands far exceed inflation and the potential for further Rand depreciation exists.

“With this in mind, it’s best to rather get off the fence one way or another and secure a home loan at a reasonable rate now if home ownership is something you aspire to. Failing to do so could cost you in the long run as higher interest rates add considerably to the cost of a home loan over the years. That said, the ‘right’ time to buy should be when you are personally and financially ready and not when society or those around you say you are.”

http://www.privateproperty.co.za/advice/property/articles/are-you-really-ready-to-buy/3402  – Privateproperty

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