By now, you are well aware that conditions in the property market are favourable for buyers. Banks are still granting bonds and the interest rate has been kept on hold, possibly for the rest of this year. The latest ABSA data shows that mortgage balances continue to grow, and based on the stable interest rate, expected higher economic growth and contained CPI below 5%, it expects further growth in household credit and mortgage balances.
According to Samuel Seeff, chairman of the Seeff Property Group, there is every reason for buyers to feel positive about getting into the market before the next upward growth cycle kicks in. That said, purchasing a property is a significant financial transaction and making a mistake can be costly because you cannot just quickly sell your house and move on.
Seeff says investing in property is generally a 20-25-year commitment that requires forethought and doing your homework, especially now. Here’s what you need to know to get your house hunting started:
Affordability – probably the most important aspect, is being able to afford property. The economy has a lot to do with that because poor growth usually means cost hikes and pressure on what you can afford. Allow for room to manoeuvre in your budget, especially in view of potential cost hikes such as Eskom electricity. Buy below, rather than above your means. If you buy smart, you can always grow with your house, says Seeff.
Pre-qualify – Malieta Botha, manager for Seeff Brackenfell, Stellenbosch and West Coast says that most first time buyers require home loan finance and need to understand what is required and the process. Once you know that you can afford, you need to ensure that you qualify for a home loan. This means a clear credit record and regular fixed income. Speak to your bank or a mortgage originator to get pre-qualified to avoid disappointment.
Neighbourhood – Pauline Hareb, sales manager for Seeff Pinelands says next comes deciding on a suburb. If you are buying for the long term, consider how convenient it is for your work commute. Also check for amenities and conveniences so that you don’t spend your downtime travelling. If starting a family is in your future, check for schools. Be sure to invest in an area with good capital value growth. Finally, check for local community action groups such as a Neighbourhood Watch.
Property type – If you are young, you may want a flat, small townhouse or semi, but do think about your later needs. It is also important that you look for key features such as internet and fibre connectivity and aspects such as security. If you opt for a sectional title property, check aspects such as whether pets are permitted and know what is considered your section and exclusive use versus common property. Also, check the conduct and scheme rules around parking, renovations and so on.
Property search – these days, it is all about web and information at your fingertips and searching for property has never been easier. You can also subscribe to alerts to ensure that you are notified as soon as a property that meets your needs, is listed. Digital technology has made it possible to see much more in terms of a photographic or video walk-through without necessarily needing to visit every property. Once you have a few that interest you, you can then set up viewings
Property viewing – despite digital advancement, there is no substitute for physically viewing a property. Do a thorough walk through and check all aspects relating to the condition of the property. Be sure to also check if there are any conditions attached to the title deed such as a usufruct, servitude or other restrictive conditions as well as the zoning. If it is a sectional title property, be especially sure to check the complex or scheme rules including aspects such as keeping of pets.
Property selection - Jannie Dyason, an intern agent with Seeff Welgedacht and Durbanville says you should check whether the property offers internet and fibre connectivity. Following the water and electricity issues, check whether the property offers a water harvest or storage system as well as solar power. Other aspects to check is whether there is irrigation, a well point or borehole, and whether these are fully functional. Also check all aspects of the swimming pool.
Offer to Purchase – Ms Botha says further that following a thorough inspection of the property and clarifying any concerns or questions about the condition with the agent, it is time to put in an offer. When putting in an offer, make sure it is the best offer that you can make, especially if it is a property which has attracted a lot of interest. Don’t bet on a low offer because you may just loose out to another buyer.
Getting a bond – because you have already done your pre-qualification, this should be fairly straight forward, but remember that the bank will need to find adequate value in the property and may require a deposit payment. Documents needed include the accepted Offer to Purchase, proof of income and at least three months’ bank statements (additional requirements if you are self-employed), FICA verification, identity documents, Marriage Certificate or ANC Contract and in some instances, also a Personal Assets & Liabilities Statement.
Transaction costs – you will need to ensure that you have cash funds available for the various transaction costs that need to be paid in addition to a deposit which may be required. These costs include transfer duty based on a sliding scale with the first R900,000 being exempt plus bond registration costs and the transfer and bond attorneys’ fees. These fees usually need to be paid upon signature of the bond and transfer documentation.
Finally, Megan Schultz, an achiever agent with Seeff Welgedacht recommends that you do your homework and make a fair offer because sellers are not impressed with chancers. Lastly, broaden your search horizons. There are a lot of up and coming areas in Cape Town, so keep your eye on the market to see where a suburb is and where it is heading. Kenridge in the Northern Suburbs of Cape Town is a good example, the suburb is developed around one of the top primary schools, yet the properties are old and still fairly inexpensive. Many are buying up the old houses for affordable prices and fixing them up. I think they will be worth quite a lot more in 10-15 years’ time once most of the properties have been upgraded.