The economy is down, and the interest rate is up. Should you be buying property right now? The answer is yes. Buying in a buyer’s market offers considerable benefits according to the Seeff Property Group.
Buy low, sell high is always the ideal when it comes to investing in property. Given that property price growth has just about stalled, buyers can find properties, often at similar prices compared to last year depending on the price category and area.
Remember, if you wait for the interest rate to come down before you buy, property prices will start rising again. There is also usually an increase in the number of properties listed on the market which means buyers have more stock to choose from. Properties that might not otherwise have been up for sale might suddenly become available as sellers will now look to offload their properties for various reasons.
When property markets slow down and stock levels increase, sellers usually become more negotiable on asking prices as they look to sacrifice some profit for a speedy sale. Prices then become more favourable. Any property investor will want to buy when prices are more advantageous as it will enable better profits once the market takes an upturn.
That said, even in a buyer’s market, we strongly recommend that buyers make their offers as "clean " as possible, says Gerhard van der Linde, MD for Seeff Pretoria East. The less restrictive conditions there are the better the chance of it being accepted.
If the transaction is subject to the approval of a bond, make every effort to obtain a pre-approval before you start looking. Do not take the chance of making an unreasonably low offer. Sellers are not that desperate as yet.
While price growth has flattened, prices are not falling through the floor either, says Tiaan Pretorius, manager for Seeff Centurion. The price resilience also offers protection for buyers in the long run. Thus, while it is the right of a buyer to make an offer that they are comfortable with, it is also the seller's right to accept or reject the offer.
If you are a serious buyer, do not waste your time. There is always the risk of another offer being accepted while a low offer is being put forward. Make sure your property is sold before you make the offer. Bear in mind that if you are waiting for prices to come down, your own property's price will also come down.
Property remains an excellent investment and sales data has shown that if you buy at the right time and hold onto it for long enough, you could benefit from excellent capital appreciation, says Samuel Seeff, chairman of the Seeff Property Group.
How long that period is depends on factors such as location and the economy. It is especially still a great time for first-time homebuyers as the banks are still granting full bonds. When buying though, Seeff cautions that buyers must ensure they can afford the property at the current interest rate and consider what might happen if your financial position deteriorates or another interest rate hike takes effect.