There are a myriad of reasons why people never enter the property market, and one of the biggest is fear. Fear of committing to a long-term debt arrangement; fear of market swings like interest rates that can affect the ongoing affordability of a home loan. There’s also the fear of maintenance costs, which fall on the owner’s shoulders and something that a renter never has to contend with. There is also the fear of the loss in value of a property, driven by an economic market that is unpredictable and time-related depreciation.
Absa’s Product Portfolio Manager for First Time Home Buyers Zydah Manuel understands the dynamics around the fear. “They are valid and very real, as is the anxiety that can emerge during the buying process. Such anxiety and stress is stimulated by fear of the unknown, and this translates into first-time home buyers questioning whether they have made the right decision relative to the home being bought, its impacts on their future, and affordability. These are questions that can dampen the excitement around home ownership but all anxieties can be addressed by tapping into resources that estate agents and banks provide.”
The estate agents are at the frontline engagement, and it is their knowledge and expertise that first-time home owners need to tap into. It is them that can provide reassurance that the suburb and the desired house is to the specification of the buyer. It is also their responsibility to ensure that the properties they show are within the affordability margins of the buyers, and thereafter manage expectations.
The next support group is the banking or finance institution, which plays the biggest role in assisting the consumer with the credit lending process, and affordability based on the buyer’s financial indicators and banking history. “It is however a much deeper role than purely financial assistance,” explains Manuel. “Home loan providers like Absa present a number of pre-buying tools and a wealth of educational information that can be tapped into that assists the property market entrant in negating any hesitancy.”
In Absa’s case, Manuel recommends resources from www.absa.co.za. These are comprehensive and include within its Knowledge Hub Centre, training and education that addresses the entire home ownership journey. Easy-to-use pre-qualification tools, and a Bond Calculator assist in determining a basic affordability status, which is often enough to provide the new entrant with the push they need to commit. And when that time comes, there is even a user-friendly Home Loans Digital Sales Platform that enables the submission of online home loan applications in under 15 minutes.
“It would however be remiss of me not to highlight the importance of pre-prep,” says Manuel. “Whilst families and friends can be depended on to provide encouragement, especially when they relate their positive experiences which further stimulates the desire to own a home, there are actions that first-time buyers should take to avoid disappointment.
Avoiding disappointment upfront
“These largely emerge from not checking and understanding affordability and credit record scores when preparing for the buying process. Also not completing a pre-approval to ensure the extent to which the client will qualify in terms of home loan finance. Research is required to focus on neighbourhoods that tick the box of needs from a suburb. Not factoring in future impacts of rates and taxes, levies, maintenance, insurance, bond registration and transfer fees, and moving costs are oft-forgotten aspects by novice purchasers.”
Needs, wants and desires
’Needs’ must also be clearly identified. These include whether the property has access to fibre connectivity and transport networks, schools, medical facilities and shopping centres. Consideration must be given to whether the property requires renovations or updates and if it caters to the potential of a growing family if that is a future plan.
Manuel also highlights furnishings. “Are your current furnishings adequate for a new property, or will you need to budget for additions. The latter requires planning and adjustments to budgets or savings. There is no point in moving to a property that forces a number of sacrifices or compromises that will impact on the happiness factor of home ownership.”
Best property type
Proving popular among first-time home buyers are sectional title and estate properties as these tend to be most cost-effective and offer heightened security in a communal environment. “Sectional title also removes the responsibility of having to pay individually for certain aspects of building insurance, and for the upkeep of the communal areas within the complex, and which are set at a fixed monthly levy that can be budgeted for,” explains Manuel.
That is not to say that freehold ownership is not within a first-time home owner’s grasp. Anything is possible if there is affordability and a strong desire, confirms Manuel, “provided there is awareness and upfront planning.
The starter home
“The first home buying process should be a positive experience even to the extent of introducing a touch of lifestyle choices and décor interest to make the house the home of your choice. The first home should accommodate your lifestyle and current life-stage, and ultimately provide you with the confidence that will enable you to become a repeat buyer or even diversify into growing a property portfolio.”