Factors to consider when buying a home for the first time.
Reporter: The daunting task of being a first-time home buyer can be both exciting and nerve-racking at the same time because with so many factors to take into consideration, this can very well turn into quite the challenging decision. Is there a specific right time to buy property? Are you looking at financial security? Do you look at your job security? Do you look at the markets? What would your advice be?
Simon Bray: You've got to look at all of those things, right? It’s a daunting process buying your first property. It's wide-eyed terror, if we're honest with ourselves, so it's a very exciting time in anybody's life. The main thing you've got to answer is, can I afford to own this property? Property is a difficult process. It's quite a long legal process, and selling a property is not that easy either. You can buy something, and if you do need to sell it because of affordability concerns, that can take a number of months so you don't want to get that wrong. The main this is, can I afford it? That's not just the bond repayments, although there's some great calculators on our site to go and work out what bond repayments would be. But there are other costs involved with owning a property - rates and taxes, transfer costs when you first buy the property, deposits that your bank expects. There are a number of things that you should go and work out and we've got a cool calculator on the site, an affordability calculator, plug it all in and it spits out what you can afford.
But we have to ask the question, at this point in time, 2016, is it better to buy at this stage or should you stick to renting?
It's a great question. We see it probably better than most. Private Property's the biggest rental platform in the country so we sit between this decision - rentals on one side and buy on the other side. And I think a great viewpoint on the market is to look at what are the rentals in a particular area doing, versus the selling price of properties in those areas. And then make a decision based on where you're looking to purchase a house. A great example is Morningside in Durban. A two-bedroom apartment in Morningside is going to cost you about R8500 a month, from a bond repayments point-of-view, but rentals in that area are already R7500 a month. So the difference is not that big. You could be paying somebody else's mortgage by paying your rental every month or you could be paying your mortgage for just a little bit more. Other areas though, it doesn't make sense at all. You look at Sandton, the difference between a renting a place and buying a place is about R6000 a month. And then City Bowl is unreal, R16 000 a month. So it's much cheaper if you want to live in City Bowl area to rent the place. So it's got very much to do with what your lifestyle choice is, but to find that area where that difference is small and you absolutely should be buying.
People looking at buying property for the first time, at this point in time, looking at the economy, I think it must be a little bit more difficult for people to enter into the property market, just given the economy and what we are facing in South Africa. But, should you be looking at buying a property as an investment or a place for you to stay, looking at a family setup - at this stage?
Those reasons for wanting to purchase a property are uniquely personal reasons. Some of the people might be making them because they've got family commitments, and they want to create a good secure environment for their family. Others, they're getting into the market because they're looking at it as a great investment choice. Uncertainty, and what we're seeing in the economy now around interest rates and costs and economy, and is the market going to grow or shrink - those are probably very compelling reasons for guys to stay out of the market. But there's another side to look at, and that's that prices haven't increased massively in the last two or three years. So first-time buyers can get a really good deal in the market. You can buy property now better than you could have, perhaps, bought it two, three years ago. So it's probably a safer bet in some respects. So, it really depends on your unique situation.
Where can people go just to make sure that they know each and every thing that they need to know when it comes to buying property, that they're informed when they take that leap of faith?
For most people, it would be the biggest investment they've ever made in their life, so it's absolutely important that they know everything that they can about the process, about the various pitfalls. Where do I get a home loan? How much am I expected to put down as a deposit? What does the legal process look like and what are some of the taxes and the cost of those taxes? Those are pieces of information you should be an expert on before you buy the property, not just afterwards. And I think that there are great resources online. We've put an advice platform on the site where you can go and you can type in any of those questions and we can give you some great advice and help you make the right property decision.
