'There's only one perfect time to buy a home'
Category Buyer Advice
First-time homebuyers have faced headwinds over the past few years. Mortgage rates rose dramatically starting at the end of 2022, stayed stubbornly high until September last year and are currently on hold again after a small decline.
At the same time, the supply of homes that first-time buyers can afford has dropped due to a construction slowdown and the fact that many existing owners are choosing to stay put currently instead of upgrading, because they have not had the opportunity to build up much equity in their properties recently and are worried about being able to afford higher home loan repayments.
What is more, a big percentage of those who are selling are still doing so to relieve financial pressure, according to the FNB Property Barometer, and taking up inventory in what has traditionally been the first-time buyer space as they downgrade to smaller and less expensive homes.
Nevertheless, says multi-millionaire real estate guru and Shark Tank host Barbara Corcoran, the perfect time to buy a home is now, as it always is.
Read more: Homebuyer's checklist: House-hunting with confidence
Quoted in The Street newsletter recently, she noted that for the past year or two, many prospective homebuyers have been sitting on the sidelines, watching to see if home loan interest rates would come down and inventory would go up.
"And now interest rates are still relatively high and stalled, while property prices continue to rise by an average of three to four percent a year, making people doubt that this is a good time to shop for a new home.
"However, the best time for anyone to buy a new home is the minute they have enough cash for the deposit."
Read more: STEP-BY-STEP GUIDE TO BUYING A HOME
If you're planning to wait until next year, Corcoran says, forget about it. "Prices are going to go up more by then so you're not saving anything by waiting. Interest rates really don't look as though they are going down by much more either, so you might as well make a decision to jump into the market just as soon as you can."
She agrees that there is no such thing as a "perfect" market, but is adamant that there is a perfect time to buy, "and that's as soon as you possibly can.
"The best investment I ever made was my first studio apartment. I could barely afford it. I could barely scrape the money together. But if I hadn't bought that studio apartment, I would never have got into the property market or been able to build up my real estate business."
*A further incentive for first-time buyers in SA is the fact that the transfer duty threshold has just been raised from R1,1m to R1,21m. The average purchase price paid by first-time buyers is currently around R1,3m, so if they purchase an existing property, it will be almost tax-free. The price of newly built properties will, however, still include VAT.
Author: Chas Everitt