Homebuying can be an exciting yet daunting task, with first-time buyers having significant questions over the process.
Despite declining nominal property price growth, young buyers have been a bright spark in the South African property market.
Although the average deposit as a percentage of the purchase price dropped by 9.3% year-on-year, with it now at R110,039 or 7.8% of the average purchase price in Q4 2022, first-time homebuyers increased their deposit as a percentage of the purchase price by 23.7% year-on-year from Q4 ‘22.
“This shows that first-time homebuyers continue to prioritise deposits and understand the importance of savings – regardless of the climate,” Rhys Dyer, CEO of ooba Group, said.
“This statistic cannot be underestimated as it sets the tone for a potential surge in first-time homebuyers once interest rate cuts commence.”
With interest rates set to drop in the latter half of 2024, Richard Gray, CEO of Harcourts South Africa, has provided a host of tips for first-time homebuyers:
1. Assess Your Financial Health:
“Before diving into house hunting, it’s crucial to get a clear picture of your financial situation,” said Gray.
He said that potential buyers need to review their credit scores
He advises potential buyers to review their credit scores, debts, and savings to understand what they can afford.
2. Understand the Total Costs:
Gray said that the price of a home is not just the purchase price.
“Remember to account for sales costs, property taxes, insurance, and maintenance expenses.”
He encourages buyers to budget for these additional costs
3. Get Pre-approved for a Bond:
“A home loan pre-approval will give you a better idea of how much you can borrow and demonstrates to sellers that you’re a serious buyer,” Gray said.
He said that consumers should shop around to find the best rates and terms.
4. Make a Wants vs. Needs List:
Knowing one’s needs vs wants is crucial in a home-buying decision.
Gray said that essential features should be considered before amenities.
5. Research the Market and Neighbourhoods:
“Spend time researching the neighbourhoods where you might want to live to understand market trends and community amenities.”
He said that this will help buyers find a location that suits their budget and lifestyle.
6. Consider Long-Term Resale Value:
Buyers need to consider the future resale value of a home.
“Look for properties with features that will be appealing to others when it’s time to sell,” he said.
7. Work with a Real Estate Agent:
“A knowledgeable real estate agent can save you time and help negotiate the best deal.”
An agent with experience in the local market are best.
8. Be Prepared for Bidding Wars:
Buyers may need to prepare themselves for bidding wars in a competitive market.
“Stay calm and stick to your budget,” Gray advises, emphasising the importance of not overstretching.
9. Have the Home Inspected:
“Always have a professional home inspection done before finalising the purchase.”
An inspector can find potential issues that could cost a substantial amount of money to fix.
10. Stay Flexible
The home-buying process can be unpredictable.
“Be prepared to compromise and remain flexible throughout the process.”
Source – businesstech.co.za