Post hard lockdown in 2020, estate agents have been reporting an increase in the number of people buying property.
Many of these people were purchasing property for the first time. Others were upgrading to bigger properties or better neighbourhoods.
Historic low interest rates and affordable house prices have been cited as reasons for this buying activity. As a result, many people who were renting property turned to buying instead.
Pam Golding Properties report that ongoing demand from first-time buyers will continue in 2021. The agency adds that many first-time buyers are purchasing properties priced below R1m, as no transfer duties are payable under this amount.
While this is good news, would-be buyers need to educate themselves before taking the plunge.
According to Samuel Seeff, chairman of the Seeff Property Group, there are rules for buying property. He offers five pillars to guide potential property buyers on their journey.
1. Understand your motives
When thinking of buying property, the first question to ask is: Why do you want to buy property? Are you buying property to live in or rent out?
The answer will guide your decision on the type of property (apartment or freestanding home) that you want to buy.
For example, if you are buying to live in, you may want to buy a property that you will hold onto for much longer. If buying an investment property, you would want to buy in an area where you can find the right tenants.
2. Be prepared
Once you have identified your reason for buying property, the next step is research. Here, you need to research information about the area you intend buying into, the neighbourhood and amenities.
Importantly, find out more about what could potentially be your property. Check zoning, and whether there’s a likelihood that the view will be blocked by another development, for example.
3. Understand your legal position
In whose name will the property be registered? If buying as an individual, the property will be registered in your name. The property will be registered under a company name if the buyer(s) choose joint or another form of ownership.
4. Know your financial position
Knowing your financial position is of utmost importance. While the property price, with the historic low interest rates may seem affordable now, you need to make sure that you factor in affordability for when interest rates increase.
Seeff advises potential buyers to get a pre-qualification before signing an offer to purchase. Knowing what you can afford makes the property search more efficient.
On top of the property price, after a home loan has been secured, there are additional costs to think of when buying property.
Financial institutions may require a deposit before granting a home loan, and bond registration costs are involved.
The property owner will have to pay a monthly bond repayment to a financial institution. In addition, the owner is responsible for costs, including rates and taxes, levies, home insurance, electricity and ongoing maintenance costs.
5. Buy the worst property in the best street or neighbourhood
Instead of buying the best property in a bad street, do the opposite. Think about capital growth over time – which leads to the question: What is your motive for buying property?
As a rule of thumb, people want to buy property that will appreciate in value over time. It is important to buy well and within your price range (again, understand your financial position).
Take your time.
Revisit your motives for buying.
Do thorough research before making any financial commitments.
Edited by fellow-Safrean Gudrun Kaiser.