When is the right time to buy?

When is the right time to buy? Most of us in real estate would answer “12 months ago”. In all honesty though, there are factors aligning in this country that should get fence-sitters and investors sitting up a little straighter and leaning in. Am I saying there will be a property boom in the next 2 years? Maybe, but what I am really saying is that the next few months are going to be the best time for buyers to negotiate terms and that sellers should give offers serious and careful consideration. I’ll try and unpack below.

• Interest rates have remained high since May last year. This has put financial pressure on most households who have some form of debt. It also scared away many 1st time buyers and got investors sitting on their capital, waiting for an opportune time to jump in.
• Apart from the people that live near the flat mountain, house price growth has been stifled somewhat due to the lowered demand created by financial pressure. But even though price growth hasn’t been stellar, people have been wary to commit to long term debt.
• Inflation in the country is around 4.6%, way down from the 6+% that it was over a year ago. We’ve taken our medicine in the form of increased cost of debt and our cough seems to have dissipated.
• Unemployment is at some of its highest levels for years and needs a catalyst to create employer confidence and kickstart a turnaround.
• The two points above are enough to reasonably expect a rate cut in late September and another in November. Beyond that is difficult to predict.
• The effect of a rate adjustment, however, is usually felt 5-12 months later. Which means decisions taken now by SARB, have bearing on consumer sentiment now but start to effect decision making further down the line.
• It is in this space between how we feel about something (the sentiment of a rate decreases or cycle) and when majority of people act on it, that savvy investors make their move.
• The problem with waiting too long is that once the majority of potential buyers “make their move”, demand has already hit higher levels. And when that happens, house prices go up.
• If interest rates are to come down twice this year, that would mean that the repayment on the mortgage you negotiate now will be at its highest level. It will almost surely decrease, leaving you more disposable income or allowing you to pay in more, shorten your loan term and reduce your total repayment on the mortgage. Speak to a BetterBond consultant to help you with future planning.
• Add in the mix that the Government of National Unity, while still in “honeymoon phase”, has been the best the country could have hoped for from a stable political climate. This all bodes well when it comes to business, local and foreign investment.
• What about foreign investment? The answer is property in South Africa is still extremely cheap when compared to the rest of the world. In other words, the value you get when making a purchase in SA in euros and dollars is incomparable to what you would get in most places. And when one looks at the political and economic landscapes of our friends in the continent north of Africa and those across the Atlantic “pond” to our left…  …well, SA doesn’t look like a bad option right now with an untapped runway for growth.

Just my two cents worth of discernment having listened to various experts in the field and spoken to people that have seen these cycles before.

Adrian Goslett – Regional Director & CEO Remax Southern Africa

Disclaimer: I’m not a futurist nor a real estate guru. LOL! This is just my opinion of what I’m seeing.