If you’ve been on the fence about buying a home, now’s the time to get off and get into the market.
So says Stephen Whitcombe, MD of the Firzt Realty group, who notes that housing demand and prices have already started to rise in response to the two interest cuts announced last year, and that this trend will no doubt be further fuelled by the 0,25% cut announced this week.
“This latest reduction is obviously good news for existing homeowners, because it again lowers home loan repayments (by about R17 per R100 000 borrowed), and also means that it’s becoming easier for them to attract buyers and sell their properties if that’s what they want to do.
“In addition, it means that those who have been planning to become homeowners for a while should find it easier now to qualify for a home loan, especially if they have received a salary increase in the past year. For example, those seeking a R1m bond will now only need a household income of around R34 500 a month, compared to around R36 000 a month a year ago.”
But this window of opportunity will be limited, he says. “Rising demand always means less inventory – and more competition for those properties that are for sale. And that translates into higher prices, so if prospective buyers wait too long now to get into the market, they will lose the advantage created by the recent rate cuts.
“And sadly, we are not expecting the pace of rate cutting to increase any time soon. In fact, this week’s cut may be the last one for a while. The US Federal Reserve decided earlier this week to hold off on any rate reductions for the foreseeable future, and other central banks including our Reserve Bank are expected to follow suit.
“So our advice to anyone who was waiting and hoping for at least one more rate cut this year to make it more affordable to buy a home and pay it off, is not to wait any longer. The sooner you get into this market in which prices are rising, the less you will pay and the more affordable your bond repayment will be.”
Issued by Firzt Realty
