With current market conditions in favour of buyers, you can find your next home or property investment on your terms.
Share This Post
While the historic low repo rates of 2020 have ended, the prime interest rate is still below pre-pandemic levels. At present, the repo rate stands at 5.5%, bumping up the prime lending rate to 9%. The small increases seen through the year are unlikely to have a significant impact on your budget as a homeowner. In this respect, taking a home loan and buying property still remain affordable and within your reach.
Depending on your monthly bond repayment, you may find it equivalent to paying rent — with the added benefit of building equity.
The market remains well balanced with sufficient property stock to meet your needs as a buyer. As buyers took advantage of low-interest rates in the past two years, many developers returned to the market to meet the demand. You will find a range of homes to choose from in some areas and more room to negotiate.
According to ooba, rising inflation, higher fuel costs, and increases in the prime lending rate have not dampened banks’ confidence in first and second-time buyers. There is still strong competition between banks to secure your home loan, giving you the benefit of more accessible home loan finance at attractive interest rate discounts. Banks are approving zero-deposit loans at a high rate. They are also making 30-year mortgages available. As interest rates increase, this can provide a welcome cushion against higher instalment repayments.
Semigration, a move from one area to another in search of a better quality of life, is a dominant trend in the property market. The work-from-home trend also remains strong as workers move from the city to smaller towns. Certain areas, especially in the Western Cape, that offer an exceptional lifestyle have seen a spike in interest. Foreign buyers are also snapping up coastal properties, making the most of a weaker rand.
By targeting properties in these sought-after areas, you can create a buy-to-let opportunity as semigrators will often rent in an area before buying. Or, you can flip the property for a profit.
The Finance Linked Individual Subsidy Programme (FLISP) or Help Me Buy A House programme is a government subsidy for first-time buyers. You can qualify for it on a sliding scale based on your household's gross monthly income (you must all earn between R3,501 and R22,000 a month). The subsidy can range from R27,960,00 to R121,626,00, with the highest subsidy available to the lowest earners.
With new changes in 2022, you no longer need an approved home loan to qualify. You can now use other sources of finance such as the Government Employees Housing Scheme (GEHS), pension funds, community-based savings schemes, etc. This makes it easier to buy property if you don’t qualify for a home loan. In addition, your financial institution or conveyancing attorney can monitor the process of your FLISP application. This makes applying more efficient.
In 2021, the transfer duty calculation applicable to property transactions was amended. The threshold increased, removing the need to pay this fee for properties costing R1 million and below. This still remains unchanged; if you buy a property in this range, you will find it all the more affordable to achieve your real estate aspirations.
There truly is no better investment than property. With market conditions on your side, there’s every reason to get on the hunt for your dream home. Contact your local Seeff property practitioner to guide you through every step of the process.