Buying a house is a huge financial commitment, with most industry experts agreeing that it’s probably the single biggest investment most of us will ever do. The hardest question to answer during the process is: did I make the right decision?
The simple answer isn’t so simple after all. There are a multitude of factors that add up to buying the “right” property for you, and these factors will differ from person to person. The first, and most important, thing you would need to decide is where you buy. After all, it’s all about location.
This might be an easy decision: if you’re happily employed and have no reason to move any time soon, you will probably look in the Province or suburb you currently reside in. But what if you wanted to choose your province from other factors, such as value for money?
According to FNB* , the average house costs across the 4 major provinces look a little like this:
Gauteng: R1.05 million
Western Cape: R1.4 million
KwaZulu-Natal: R1,02 million
Eastern Cape: R850,761
Property in South Africa is currently a bit of a paradox: we have shown a strong growth over the past decade, with the average house price growing with inflation around 5%** and with inflation currently at 6%, that’s a growth of 11% - a great return by anyone’s standards.
However, there’s a little more to it. The national property growth has been significantly enhanced by the Western Cape’s growth. The latest stats show that the growth in the Western Cape is well over the national average at 7.6%. Although this means a great return on your investment in this province, it also means that property prices are substantially higher than in any of the other provinces.
Taking it a step further, the only major city to see double-digit growth in the last quarter of 2016 is the City of Cape Town. Compare that to the City of JHB, which only had a growth of 2%, you begin to see that property has in fact not shown the type of growth the national average might suggest.
Location is often something very few of us want to compromise on. This could be because the areas we have chosen are the ones that suit our lifestyles, have the right amenities or schools, or might simply be near the people or things we enjoy.
Choosing where to live generally has the greatest influence on the home we actually end up buying, and is therefore the one thing you should decide upon before starting your property search.
When you are considering purchasing a new home, you also need to take into account how far your money might go. The best, and easiest way, to do this is to see how much you can actually afford. Luckily, HelloHouse has a handy bond, affordability/budget calculator for you to use. Once you know how far your money might go, you need to consider what to buy.
Buying a free-standing home or apartment from an agent comes with pros and cons. The pros are that you have the guidance of an estate agent who will not only help you navigate the often confusing waters of property buying, but also be there to help you with the various nuances of the business like home inspections, offers to purchase and occupational rent.
The drawbacks of buying this way are the costs involved. Not only do you pay the agent but you need a substantial amount for both the lawyers’ fees and the transfer costs. The easiest way around these costs is to buy off-plan.
The pros of buying off-plan are substantial: not only do you get a new-build home, but you will often get the latest modern amenities, built in cupboards and an open plan layout that suits today’s lifestyle. You also score financially in that you don’t pay any lawyer or transfer costs, pay current property prices that often show growth between the time you pay and the time of completion, and have a general warranty on the home should anything go wrong in the subsequent years. These financial bonuses can be felt for years to come, with your home less likely to need any further renovations or upgrades.
Once you have your area chosen, how much you can afford and what type of property you are interested in, a clearer picture will begin to take shape. From now on you need to figure out what are the areas you are willing to compromise on. For example, how important is off-street parking to you? If it’s a deal-breaker, you might be forced to look at properties in areas outside of the CBD where parking can be scarce.
If schools are a big factor in where you want to move, you might need to compromise on something like the size of the house, especially if the school catchment area is in a pricier neighbourhood.
Compromise will eventually boil down to the things you feel you need most out of your home.
Remember, this might be the biggest financial investment you make but it will also most likely be a decision you have to make more than once. Your needs will change with time, meaning a move is more than likely something you will experience. Keep that in mind whenever house hunting as any property you purchase now should be seen as an investment, and one that needs to grow in value.
See what’s for sale on-plan in your chosen area now.
* FNB House Price Index 2nd Quarter 2016
* *Lightstone Property Residential Property indices June 2016