"Although the recent interest rate hike had little effect on the overall property market, it is likely to impact on people entering the market," says Chris Tyson, CEO of Tyson Properties.
"Although the excitement of owning your own home can sometimes be overshadowed by the concerns that come with acquiring the associated debt, the market is performing solidly and it would therefore be a good time to buy."
According to latest statistics from BetterLife Home Loans, the average first-time home price has increased in the past 12 months to R649,084 and, most significantly, on average the banks are prepared to finance approximately 92.5% of the purchase.
"Saving a deposit to purchase a home is probably the biggest obstacle faced by first-time buyers. The fact the average deposit that first-time buyers were required to pay has dropped from 8.7% to 7.5% between June 2014 and June 2015 is extremely encouraging for this market who, in general, are younger people with less ability to cope financially with the ever increasing living costs," explains Tyson.
BetterLife statistics also highlighted that the lower deposit requirements has also helped to ensure that 41% of the 37,000 home loans formally granted by the group in the past year went to first-time buyers - another positive for those looking to own their first home.
"Although affordability is the biggest challenge when buying a home, there are additional criteria that are essential to the buying process and therefore need to be considered," says Tyson.
Buyers need to check their credit health, ensure a good credit profile and stable employment history or source of income. They also need to know that there are additional fees when buying a house - including bond initiation fees, transfer costs, registration costs, and rates and taxes.
"Buyers also need to plan ahead, with contingency to survive any potential interest rate increases," confirms Tyson. "According to ABSA, the average growth on residential property over the past 20 years has been in the region of 13% per annum. This proves that buying property is a good investment and that, although it might be daunting, entering the property market is inevitably a good decision."
