Price Decline Makes Property Affordable

The information in this article is courtesy of Business Day (Real Price Decline Makes Property Buying more Affordable - 15 June 2009)

Mike Bester, Realty 1 International Property Group CEO, said in an article on the Business Day website that South Africans can realistically hope that the worst of the recession will be behind us by the end of 2009. This comes after consumer confidence in the US improved measurably in the past weeks.

He explained that expectations are growing that the US will reach the end of its depression in the third quarter of 2009. Reports by Absa showed that this country had experience its biggest monthly gain in its expectations index since April 2003.

Back in South Africa however, locals can scoop up some serious bargain, according to Bester. This after house prices showed a first quarter, year-on-year decline for the first time since late 1986.

With the market set to get worse before it get better, it seems that now is the best time to buy. However, Bester warned prospective buyers should be sure what they can afford in terms of monthly repayments, and should not bargain on the interest rate dropping any further.

Bester believes that our nation has lost the discipline of saving, which is a real problem since banks are reluctant to grant loans without a significant deposit. He went on to explain that those currently in the market will make their profits out of buying not selling. This means that buyers should spend a bit more time upfront on getting to know the market and what is for sale in the area in which they want to buy. He especially called on potential buyers to pay careful attention to the properties that have spent a long time on the market because the longer a home has been on the market, the more likely you are to get it for a fair, if not bargain, price.

He also advised buyers to learn the difference between cheap and good value. This means that if you can’t find a bargain, you should be happy with a fair price knowing that you can achieve good capital growth in the long-term.

Another tip from Bester is to act quickly when you found the right property. This means being pre-qualified, flexible and ready to move when you signed the deal – all things that can serve as motivation for a better deal.