Consumers wishing to enter the property market should put aside some money every month and build a ‘kitty’ of savings for when they are ready to buy a home.
This is also a good test of whether you can afford to buy property. If you can put aside something every month, then you are preparing yourself for that fixed commitment when you do obtain a mortgage to buy a home.
Tony Ketcher, MD of Seeff Randburg, says in the middle-income market agents deal with consumers who generally do not have money available to place as deposits on purchases.
“What we are experiencing is that most customers are coming up with 5% and 10% deposits – just enough to secure the sale. In many instances we find they are looking to parents to supplement rather than having the funds available out of savings. There has been a trend lately of customers looking for 100% bonds – but there is a clear understanding that they must have funds available to cover the costs.
“There is no doubt that buyers are becoming significantly more realistic about what they can afford, but also are looking to estate agents to provide that advice. Our agent team in most cases will refer the potential buyer to bond originator associates to determine what they can afford, based on their current income.
“The trends in areas that buyers choose is also changing. Buyers are prepared to look at more affordable areas, where previously these areas would not have been on their list of potential areas for consideration. In many cases our agent team will not even consider discussing areas until a pre-qualification based on what the buyer can afford has been completed, and buyers are very appreciative of this process.”
He says there is still a high level of distress in the market. Many sellers have really gritted their teeth and hung on under difficult circumstances, and as a last resort are calling for assistance from the banks. In many cases agents are being asked to advise on what the sellers should be doing. This is where sellers’ expectations are still very unrealistic about the prices they believe they can achieve for their homes, but this is more out of desperation than anything else.
“We always encourage such sellers to open discussions with their banks, who are willing to assist, and we work with the banks to achieve the best possible price for such sellers.
“Although everyone wants to have a dream home, unless you build to your own specifications, it is not always possible to achieve exactly what you want. I always advise buyers to start small. I would encourage buyers to do their research into the property market sooner rather than later. Study suburbs, learn more about the prices of properties in areas they like, and then determine what kind of repayments are necessary at certain price levels. This can be a fun experience, and will definitely teach you a lot about the market. This is particularly relevant for first-time home buyers,” says Ketcher.
