Property prices in South Africa increased by 4.3% in the first three quarters of this year, compared to the same period in 2020. There has been high demand for houses this year, however there are now signs that the market isn’t as competitive as it once was. This is good news for prospective buyers like you hoping to invest in and secure your first property.
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Understand the market
A recent survey found that the number of South Africans feeling confident about the property market has dropped by 4% since Q2. This means fewer people will be willing to invest their cash in property. When there is less demand for property, sellers have no choice but to sit back and wait or drop the asking price of their home. It’s worth looking around for properties that have been up for sale for some time as these sellers will be keener to sell up, meaning you’ll bag yourself a bargain. Over the past few years, the average number of days a property sat on the market has continued to increase. For example, in Q1 of 2018, it was just over 40 days, but in Q1 of 2021 it was 100 days.
Prioritise your mortgage
You never really own your first home until you’re mortgage-free. More than 50% of South Africans have paid off their mortgage, according to News24, and you can too. If you’re lucky enough to come into a large sum of money or you get a pay rise, consider putting the cash into your home. The more you pay your lender each month, the less you’ll pay in the long-term and the quicker you’ll truly own your property. A refinance calculator can be used to see exactly what savings you can make on your monthly repayments.
Interest rates in South Africa are currently low. The average is around 7% which means buyers can get good rates on a mortgage. If you move fast now, you could get a grab investment as your first property. Interest rates are expected to rise in South Africa soon, although Business Tech reports this is unlikely to be more than a 0.25% increase. The benefit of buying your first home now while interest rates are low is that you’ll be able to sell it in the future for a profit which will make it easier to afford your next property.
At the start of the year it was reported that the majority of high net worth individuals in the country planned on buying at least one luxury property in 2021. Luxury properties are now a trend which means the price of them is high and are likely to continue to rise. When searching for a property, avoid luxuries and stick to the basics. In time, you can complete renovations on your home which make it luxurious, such as converting your loft, extending your kitchen, or building a games room.
Now is certainly the right time to invest in property in South Africa. You can get a good deal as long as you thoroughly research the market and don’t make any hasty decisions.