Being A Buyer in SA 2018 Residential Property Market
Property experts remain optimistic about forecasts for the remainder of the year even as ordinary South Africans are still reeling from the 2.2% GDP decline in the first quarter of 2018.
Simply put, even with this technical recession, buyers and investors can still look forward to participating in a growing market.
A buyer could be someone that is either purchasing their first home, or someone who has experience in buying for investment reasons, or even someone who is purchasing another property while selling their current property.
Times may change but the key criteria employed in making a decision to buy are as timeless as the notion of property ownership itself.
Location, Location, Location
The most, and it never changes, important criteria for a buyer is location, location, location. Buyers decide on locations based on different reasons e.g. one buyer would like to buy a property close to where they work, another buyer would like a property close to family, or amenities such as schools and public transport.
You only need to glance at the PropertyFox School Feeder Zones 2018 Guide, released earlier in the year, to bear this out. This guide focuses on helping you map the essential areas to buy in order to be zoned for the school you would like to send your child too.
Location also determines the crime levels you will have to take into consideration when planning your home security budget, safety is a primary component when choosing a property.
Affordability is a key aspect for any buyer. Buyers make decisions by comparing the market medians with property prices in their region of affordability. There is a noticeable trend of potential buyers spending substantial research time on platforms such as Property24 in order to make certain that their potential purchase property is not over-valued.
The technical recession also means that buyers tend to be looking for properties with low maintenance overheads. Overspending on initial outlay is out as buyers are aware, and cautious of, higher interest rates and property related premiums, including basic insurance.
Type of Property and Size
Buyers tend to know what type of property they are purchasing. Buyers purchasing to live in the property focus primarily on practical family based concerns such as amounts of bedrooms and bathrooms. But it’s not only the size of the property – other amenities will make the property stand out in comparison to the rest – Does it have a pool? Is there parking? Parking is a huge selling point, especially in the case of sectional titles.
The property finishes -the state of the built-in cupboards, flooring and bathroom fixtures will also make a huge impact on what the buyer is willing to spend on initial outlay.
Internet access has become a basic requirement for modern living. But while in countries like the United States and United Kingdom, broadband internet can add up to 3% of a house’s value, South Africa has a different conundrum when it comes to communications.
Internet access is crucial to all not only for basic communication but for many it also provides access to education, as well as the search for employment. Due to South Africa’s connectivity stats, being zoned for fiber access is most definitely a positive toward purchase price.
As much as 85% of households do not have access to internet, and 61% of people report that their internet use is mostly at work. According to Absa’s Homeowner Insights, young South Africans value a good internet connection over a pool or extra room. These millennials will be entering the housing market soon and will shift the focus on technology even further than it is now.
Long Term Value
For buyers, long term value has always been critical and currently, future fluctuations aside, we are currently in a buyer’s market. Great news for buyers, as it gives them scope to find property that is a sound investment.
Location, size and tech appeal give the property longevity and ensure that, even if market fluctuations move us into a sellers market situation, the property will always bring enough of a ROI (return on investment) to bolster them against the stress of a future move.
What Exactly Is A Buyer’s Market?
A Buyer’s Market is simply when the supply of inventory on the property market exceeds the demand; meaning there are more homes for sale than there are actual buyers.
The technical recession also means that buyers tend to be looking for properties with low maintenance overheads.
This is an expectation in a recessional period such as we are going right now. With this, sellers must compete to attract a sale from a limited pool of buyers. A buyers’ market also allows buyers to be a lot pickier about properties and prices.
Difficulties of Being a Buyer
Buyer’s market notwithstanding, there will always be challenges coupled with buying property. Investing successfully in a property is an achievement of note, it is no longer a surefire way to get ROI -a buyer must predict and prepare to flip the property intelligently to achieve the best possible ROI.
ABSA’s The Homeowner Insights report of 2015 raised affordability as the main concern of 37% of the buyers interviewed. Furthermore, out of 87% who had indicated that they can afford the home loan they applied for -only 38% received approved loans.
Key to this insight is the very reason why affordability is a challenge for a buyer -what may seem affordable to the buyer may not be what the bank is willing to offer them.
- Purchasing the Property ‘Voetstoots’
A common feature of an offer to purchase is the ‘Voetstoots’ clause -meaning the property is sold as is. This protects the seller from any legal action that may occur from latent defects not picked up by the buyer on initial inspection.
Should the purchaser find any latent defects which they feel that the seller should have let them know about, they would need to approach a court of law to determine whether the Voetstoots clause does indeed indemnify the seller.
It’s important for first-time buyers to note that with the introduction of the Consumer Protection Act (CPA) the ‘Voetstoots’ clause can sometimes be overturned. The CPA has changed the game for consumer rights. In a nutshell, it states that buyers are entitled to receive goods that are of good quality, “reasonably suitable” for the purposes for which they are generally intended, defect-free, durable and safe.
All of these standard buyers difficulties aside -it is still a great time to be a buyer. With homes priced competitively, the wealth of information at your disposal, and with technologically advanced institutions like PropertyFox on your side; being a buyer in the residential market is now more lucrative than ever for potential investors, but also for home builders putting down the roots of a new family -a really great time to find the perfect family seat.