Continue renting or take the leap into the Buyers' Market
Category Advice
Continue renting or take the leap into the Buyers' Market
With all thanks to 2020 and the Novel Corona Virus, COVID19, the South African Reserve bank cut interest rates 5 times in one year leading to a prime lending rate of 7%, the lowest level since 1966.
The lower interest rates as well as lower transfer duties are leading buyers, who previously could not afford to buy a property and opted to rent, to enter the property market, while cheaper borrowing costs from major banks are enabling buyers to purchase bigger or more expensive homes.
The same trend is now seen in the beautiful town of Hermanus as property sales are increasing at a rapid pace, especially in the middle-priced segment. This could be the time to give up that lease and start to pay off your very own bond on your own home.
"First-time Buyers are streaming into the market, accounting for 54% of Ooba's mortgage bond applications processed in the third quarter, a 10% increase compared to the third quarter of 2019. During this period, Ooba recorded a 50% increase on Q3 2019 in the volume of home loan applications processed, the highest level of volumes in 13 years," said Dyer chief executive officer Ooba
On average a rental in Hermanus of R10,000 could afford you a home to the value of approximately R1,300,000, depending on monthly income and affordability. This changes the outlook of most tenants.
Let's weigh up the pro's and cons;
Advantages to owning a property:
- The value of a home will appreciate over time and if you decide to sell, you can earn a profit off the sale.
- You can alter the property, including décor changes, landscaping and renovations, to suit your needs and your style.
- You have the option to refinance your bond amount should you wish to withdraw a large amount of money to pay for major purchases.
- There is an opportunity to save money in the long term as there are possible tax deductions related to income-generating properties.
Advantages to renting a property:
- Renting a property allows more flexibility than owning a home. This is ideal for those who could be faced with sudden changes such as a job relocation. Renting requires no long-term commitment from a Tenant, and is the best option if you don't intend on staying in one place for a long time.
- As a Tenant, there is the possibility of living in an area in which you could not afford to buy.
- The only insurance required by a Tenant will be to cover the contents of the home, while all maintenance work on the property is for the Homeowner's account, as is homeowners insurance.
- After paying rent, a Tenant may have additional money which they can use to invest elsewhere, whether it is saving towards buying a house or investing in the stock market, and need not worry about putting additional funds into a home loan.
For more current information about buying a property in the area you are renting, contact our friendly area experts at Hermanus Property Sales.
(https://businesstech.co.za/news/property/)
Author: Hermanus Property Sales Admin
