Now’s an opportune time to get onto the property ladder. Here’s why:

First-time buyers with funds at their disposal are currently well-placed to gain an initial foothold on the property ladder. Particularly in the light of interest rates remaining at historic lows, banks continuing to compete for mortgage finance business, and the slightly lower growth rates currently experienced in residential property values.

Says Dr Andrew Golding, chief executive of the Pam Golding Property group, “While the economy may be subdued at present, home buyers continue to capitalise on buying opportunities in the residential marketplace. This is especially evident below the R2m and R1.5m mark – a price band with particular relevance to first-time buyers seeking starter homes which, if wisely selected, will appreciate in time, enabling them to move up a notch on the property ladder.”

Lower average deposit

Good news for aspirant home purchasers is ooba’s recent announcement that in Q1 2018, they recorded the highest home loan approval rate in over a decade since the introduction of the National Credit Act. In addition, banks are even in some instances willing to lend the full value of a property without requiring a deposit – with an average deposit of 12.5% required for first-time buyers in Q1 this year, reduced from 14% in Q1 2017.

Says Dr Golding: “This is a marked difference from the 20% deposits so commonplace just a few years ago. And as we celebrate Youth Day this month, this is perhaps an appropriate juncture for the younger generation to start planning ahead for their first property acquisition.”

Forced saving

“First-time buyers are advised to do their best to enter the market as quickly as possible, bearing in mind affordability,” according to Carol Reynolds and Gareth Bailey, Pam Golding Properties area principals for Durban Coastal. As they point out, it’s really a forced saving, as most people won’t save the difference between a cheaper rent and a bond, so at the very least a property purchased using a bond is a compulsory saving over time.

Justin Kreusch, the company’s joint area principal in Port Elizabeth, agrees: “Owning rather than renting affords you the benefit of capital appreciation of your asset, which in turn can enable you to trade up in the future.”

Adds Reynolds: “Ideally, look to buy the ‘worst’ house in the best possible area, while keeping within your budget. For example, I would recommend a smaller apartment in a slightly better area than a spacious apartment in a less desirable area.”

‘Be conservative and build up from there’

Says Bailey: “It’s best to start off buying fairly modestly but, if affordability permits, try to acquire something with a granny flat or cottage you can rent out, and then save a deposit in order to buy an investment flat. Many young, up-and-coming couples make the error of buying the best property they can and then fall into a big debt position. Rather be conservative and build up from there.”

A lot depends on your needs and personal situation, says Kreusch. “For someone who travels a great deal, it may make more sense to rent a small property and buy an investment property that will give you a bigger yield than your rental cost. For someone wanting more stability, a purchased home makes more sense, but each option has its merits.”