The property sector, like all sectors, has not escaped the
effects of Covid-19 and its impact can be felt in multiple ways.
Firstly, the price of high valued residential property, as well as property used for leisure and hospitality has come under enormous pressure; due to decreased consumer demand.
Secondly, a positive impact has occurred, where consumer demand for middle to affordable housing is set to increase over time; as a result of the prime interest rate being at its lowest in South Africa’s history at 7.25%.
Finally, consumers’ sentiments regarding the utility value of property has shifted in a more positive direction, as a by-product of changed consumer experiences of the home during the Covid-19 era.
this context, we expect to see increased transactions from cash-flush property
investors and first-time home buyers. Homebuyers that were undecided about buying
property for primary use are more likely to make up their minds to purchase
property, given the low-interest rate environment. The low-interest-rate environment
is essential to stimulating consumer spending and economic recovery.
understand the impact of the low-interest rate on the currently renting
population, one needs to take a segment view and understand how consumer
affordability will have improved. At present, the gap between the monthly
installment of bond payers vs. tenants has closed materially. This presents a
unique opportunity for tenants to potentially buy the properties they are
For many, homes have become more than just a place of
shelter; they have been a place of business; entertainment; classrooms and
workout environments. This newfound appreciation for the importance of a primary
residence is one of the few silver linings of this
pandemic. Unfortunately, this experience accounts for only 35% of the
South African population; as the same cannot be said for the 65% of South
Africans who are either renting or living in un-bondable housing, provided by
the government. Their living experiences (during this lockdown), has brought
the need for better housing options into sharp focus; and the need to promote
homeownership as more of a necessity rather than a luxury for South Africans.
Buying a property at present (as the world continues to
battle this pandemic), requires one to tread cautiously. For example, we've processed a flood of requests
for pre-approved home loans, which is the first step for all potential homebuyers, when thinking about buying property. This is a positive sign of responsible buying behaviour from consumers, during these uncertain times. Further to this, it gives customers the ability to shop with confidence, which is vital for engaging with estate agents and residential developers to start the buying journey. The MortgageMarket pre-approval tool gives customers an accurate indication of the home loan amount they could qualify for, in just two minutes.
Against this backdrop, these are the five things I believe aspiring property owners should look out for before acquiring their next purchase:
- Make sure the purpose of your purchase is clear and based on a mid to long-term timeframe, due to the high costs involved in a property transaction.
- Complete a pre-approval to ensure you know the state of your credit health and affordability. This will enable you to narrow down the type of property that suits your budget.
- Understand all the costs involved with buying and maintaining the property. Your monthly repayment cost is just one of the costs you will be faced with. Other costs include monthly rates and taxes; levies; electricity & water bills, building insurance, and general maintenance, to name a few.
- Make sure you are purchasing a property in an area that has good amenities and is well maintained. The value of your property is dependent on the ecosystem of schools; hospitals; good road networks; shopping centres and social facilities. Ultimately, this is what gives the property its intrinsic value.
- Lastly, use a marketplace like MortgageMarket.co.za to shop around for the best home loan deal for your property. It’s a borrower’s market, therefore take full advantage of being in a position to ensure banks give you the best home loan deal possible.
Tim Akinnusi is the co-founder and CEO of MortgageMarket