What's Holding You Back?

Although many buyers are eager to take advantage of the favourable market conditions such as the low interest rates and competitive market prices, some still err on the side of caution, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He notes that while the large majority of first-time homebuyers acknowledge that the market we are currently in is an ideal time to take the step toward home ownership, the biggest concern which has kept many of them on the fence is simply whether or not they will be able to afford to buy a property.  "This is a valid concern which can be laid to rest by consulting with a real estate professional or a bank," says Goslett.  "A buyer can speak to a credible mortgage originator such as BetterBond, to establish the home loan amount they would potentially qualify for first.  They will be able to list and explain all the costs involved in buying a property, and will be able to assist the buyer in calculating how much they can afford.  In this way, the buyer will have a clear picture of what price bracket to look at before starting the search for their first home, which can save a lot of time and hassle."

Goslett also says that there are a number of online mortgage calculators that will give buyers an estimate of what they can qualify for as well as the bond repayments, but says that it is important to note that there are no guarantees with regards to these results.  The banks also offer a variety of different product to suit individual requirements.  Therefore first-time buyers should be sure to investigate all the options to find the solution that is tailored to suit their specific needs.

According to Goslett, while buyers should move quickly to secure the home of their dreams, they should also not be pushed or rush into the decision.  Property pricing has once again started to rise and is expected to continue to do so in the future, so the sooner you can get your foot in the door of property ownership, the better.  "While it is important for buyers to weigh up their options carefully and research all aspects thoroughly before they commit themselves to the responsibility of owning a property, there is a chance that hesitation could lead to buyers missing out on the opportunities the current market has to offer.  The question should not be whether they can afford to enter the property market, but rather, can they afford not to," says Goslett.

Many prospective buyers are holding off a while longer to see what the market does and are remaining in a rental situation believing it to be more cost effective.  However, with the rising demand for rental property, rental prices have been on a steady increase since 2009 and are likely to continue.  If this trend does continue, the long-term cost of rental could eventually heavily outweigh the cost of buying a home.  "With property considered a long-term purchase, decisions made regarding property should be based on a long-term basis.  While some potential first-time buyers may believe waiting is the best decision for them at the moment, this may not be the best long-term decision," says Goslett.  "Each month that a potential buyer rents could potentially mean a possible lost opportunity and an increase in costs.  Owning a property will also mean that money spent on rental will now go towards paying off a tangible asset and solid investment."  Goslett says that in any market, real estate is a good investment that continues to provide a solid return on investment over the long-term.  "While the property market is cyclical in nature and goess through various stages, over a longer period, property will outperform most other investment vehicles," he says.  "Top investors including perhaps one of the world's most renowned businessmen, Warren Buffet, feel strongly about the property market and the stage it is in right now.  Buffet has been quoted saying that if he had a way of buying a couple hundred thousand single-family homes, he would load up on them."

Goslett notes that it is important for potential homebuyers to understand the pros and cons of purchasing a home and not take the decision lightly.  "However," says Goslett, "for those who have a good credit record, available cash or access to finance, now is the perfect time to invest in a property with the view to future capital appreciation," he concludes.