Buying your first house

OWNING RATHER THAN RENTING AFFORDS MANY BENEFITS OVER TIME

The below R2 million bracket is especially favoured now.

With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, firsttime buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.

“This is especially evident below the R2 million and R1.5 million mark – a price band with particular relevance to first-time buyers seeking starter homes which, if wisely selected, will appreciate in time, enabling them to move up a notch on the property ladder,” Pam Golding Property group’s Andrew Golding says.

Home finance experts Ooba in Q1 recorded the highest home loan approval rate in over a decade since the introduction of the National Credit Act. In addition, banks are even in some instances willing to lend the full value of a property without requiring a deposit – with an average deposit of 12.5% required for first-time buyers in Q1 this year, reduced from 14% in Q1 2017.

“First-time buyers are advised to do their best to enter the market as quickly as possible,” according to Carol Reynolds and Gareth Bailey, Pam Golding Properties area principals for Durban Coastal. As they point out, it’s really a forced saving over time.

Owning rather than renting affords you the benefit of capital appreciation of your asset, which in turn can enable you to trade up in the future.

“Ideally, look to buy the ‘worst’ house in the best possible area, while keeping within your budget. For example, I would recommend a smaller apartment in a slightly better area than a spacious apartment in a less desirable area,” Reynolds says.

Acquiring property with a cottage you can rent out allows you to

Buy the ‘worst’ house in the best area

save a deposit to buy an investment flat. Many young, up-and-coming couples make the error of buying the best property they can and then fall into a big debt position. Rather be conservative.

Suburbs close to arterial transport routes, schools, hospitals and business nodes retain value well and a suburb where owners remain for a long time is also a good sign. Also look for a secure environment. – Moneyweb

THE CONTRARIES: First-time buyers need to understand all the costs involved in property acquisition, namely transfer costs, monthly mortgage repayments, rates, municipal tariffs and levies.