First time buyers: here’s how to make the most of today’s market

Advice

   

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South Africa is currently firmly in a buyers’ market, with an abundance of properties on offer at extraordinary value. Combined with the recently slashed prime lending rate (now a rock-bottom 7.75%) and lower transfer duty threshold (R1 million), there has seldom been a better time for first-time buyers to get a foot in the market.

Craig Mott, Cape Town Regional Sales Manager for the Rawson Property Group, shares his tips on making the most of the opportunities on offer. 

Don’t compromise on condition

Buyers are currently spoilt for choice when it comes to properties, with everything from brand-new builds to real fixer-uppers on the market. According to Mott, there are pros and cons to homes in all conditions, but buyers  looking to maximise their returns on investment need to be ready to do what it takes to get their properties in ship shape.

“If you don’t have the budget or patience to fix a property up, it’s a smarter choice to save a little longer and buy a home in move-in condition,” he says. “Unrenovated fixer-uppers are not going to appreciate nearly as well as homes in good condition over the next few years, and you’ll be dealing with constant maintenance headaches in the meantime.”

Cheaper isn’t always better

It’s a well-known fact that entry level properties tend to appreciate faster than their more expensive counterparts, but Mott says there is a sweet spot when it comes to price points.

“Properties under R1 Million now have the benefit of no transfer duty, which can make a big difference to the profitability of an investment,” he says, “but we’re actually expecting some of the best growth to be found in newer properties priced upwards of R1.1million. These will remain current in terms of style and finishes for at least the next five years and will still benefit from the higher growth of the entry-level market.”

Vetting is essential  

It’s easy to be swayed by a particularly stylish unit in a complex, but Mott cautions buyers not to forget to also vet the complex as a whole.

“The condition of common areas, your neighbouring units, the financials of the body corporate and the quality of management all make a huge difference to the potential appreciation of a unit,” he says. “You have every right to ask for the complex’s financial statements and details on its managing agents to make sure your asset will be in good hands if you decide to make a purchase.”

The same goes for new developments. Mott highly recommends researching a developer’s track record before making any investment. If they have a history of successful developments, the chances are good that their latest project will thrive as well.

“It’s always a good idea to get more information from the selling agent on a development, such as images/3D renders, floor plans, proposed levies, location and placement of additional building phases etc. Make sure you go through this information thoroughly to avoid disappointment at a later stage,” he says. It’s always best to seek clarity from the selling agent should you not understand the information.    

Don’t forget the “hidden” costs

As a first-time buyer, you’ve probably done your research into all the costs of buying a property, from transfer duty to conveyancing fees to bond initiation. Don’t forget to consider the “hidden” costs of actually owning a property as well.

“It’s not just about bond repayments and maintenance,” says Mott. “You need to budget for rates, taxes, and – if you’re buying into a complex – regular and special levies. Things like levies will also increase annually, so you need to build some wiggle room into your budget to make sure you can accommodate these changes over time.”

Keep an eye on the future

Property is a long-term investment, so it makes sense that any purchases should be done with the future in mind. Mott says things like fibre-readiness, prepaid electricity metres, energy efficient designs and grey water capturing systems could all be beneficial in the long run. “Of course location is vital in today's times and having access to public transport, shops and amenities is crucial. Buying a property in a rapidly developing area can help you achieve great capital appreciation on your asset over time,” says Mott. 

“Ideally, you should always keep your future buyers in mind when purchasing a property,” he says. “The easier it will be for you to meet those buyers’ needs, the easier it will be for you to make a favourable sale down the line.”

Don’t be afraid to ask for help

Sussing out the lay of the land, analysing development financials and getting into the mind of future buyers is, admittedly, a lot to ask of a newcomer to the market. For this reason, Mott highly recommends getting in touch with a trustworthy and experienced real estate agent to help you navigate all the opportunities (and potential pitfalls) you may encounter.

“A lot of buyers are reluctant to approach agents directly, as they don’t want to limit their options to a specific portfolio,” says Mott. “What they don’t realise is that a good – and ethical – agent will provide a huge amount of knowledge and guidance with no obligation. 

“As real estate professionals, our role isn’t just to facilitate transactions, but to educate and assist the public in making smart property choices. It’s in everyone’s best interests to maintain a healthy and profitable property market for us all.”

For more information, email marketing@rawsonproperties.com or visit www.rawson.co.za for the latest market tips and industry news.

Rawson

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