Focus on getting into the market, not on timing

Don't get too hung up on interest rates or market cycles, or you may miss out altogether on the advantages of property ownership.

That's the advice of Gerhard Kotzé, MD of the RealNet national estate agency group, to young people who still want to buy their own home and get into the property market. "They need to know that even though interest rates have been rising for the past few months, there are many other factors that they need to take into account before they decide to buy now or to put their plans on hold.

"Consumers buying shares or other assets seem to accept quite readily the fact that even though they may plan to "buy low and sell high", they are highly unlikely to be able to time their purchase for the exact moment a share reaches its lowest price, for example, or their sale for the exact moment when the price peaks.

"And there is even more to consider when buying a property, so like all the most successful investors, real estate buyers shouldn't get stuck on trying to "time" the market. They should rather focus on deciding what type of home they want, what the price trends and prospects for growth are in the area they prefer, what renovation and transfer costs they might need to pay and the availability of finance - and being ready to make their move when all or most of these factors are lined up in their favour."

In short, he says, they should concentrate their energies on actually getting into the market - on finding a home that suits them and offers good value at a price within their loan qualification limit - "because their chances of doing so right now are actually really good.

"High demand over the past two years brought many developers back into the market, with the result that stock levels are up in many areas and that potential buyers not only have a bigger range of homes to choose from, but more room to negotiate price. At the same time, there is still fierce competition among the banks for new home loan business, so buyers with good credit records have every chance of being approved for a loan at a favourable interest rate."

Both these factors, Kotzé notes, will help buyers to keep their monthly loan repayments down and within their affordability limits. "In addition, the prime interest rate is currently still lower than it was three years ago, making it easier for buyers to qualify for a loan than it was then, especially if their earnings have risen in the meanwhile."  

On the other hand, prospective buyers should note that home prices continued to rise even during the worst of the pandemic, and that by waiting for interest rates to possibly go down again, they may well price themselves out of a market in which demand is rising again.   

"And finally, we have seen again and again that while interest rates are bound to go up and down during the term of a home loan, buyers who take the plunge always find that the actual monthly repayments tend to average out over the life of their home loan - while the value of their property tends to keep rising, and gearing continues to work in their favour."