Tony Clarke urges first time homebuyers to get moving
first time homebuyers should right now be doing everything in their power
begging, borrowing, canvassing their banks, their relatives and their
employers to find the 10 to 15% deposits required to buy a home,
says Tony Clarke, MD of Rawson Properties.
All too often, said Clarke, when I talk to young people I find that their whole emphasis is on lifestyle: everything they earn today they spend tomorrow. We need to foster a culture of saving and the best way to do this is to stretch yourself on a home purchase.
The property cycle, he added, is one of those realities with which we all have to become familiar it is as inevitable as winter and summer at the moment all the pointers indicate that the retraction, downturn period is ending and the path from here on is upwards. This means that if you do not buy in the next six to twelve months you will find yourself later paying the premium that buyers have to fork out to acquire property in a rising market.
Clarke said that by the third quarter of 2010 the nominal price growth on residential property (i.e. after allowing for inflation) could well be in the region of 6%. This growth will be calculated on the property value, not on the reduced selling price.
If potential buyers genuinely are unable to find the cash they need to for a home purchase, they should, said Clarke, seriously consider going into shared ownership with two or three partners, some of whom, having later made their profit, might be prepared to sell their share to the originator of the scheme. The best buys, Clarke said, will probably be found among repossessed homes, which usually sell at a 25% discount.
The banks attitude to first time buyers and buyers in general is easing up, said Clarke. In August ABSA announced that 90% (+) bonds would again be available and FNB and Standard Bank had already made easier loans and small deposits possible to accredited buyers.
First time homebuyers, said Clarke, should try to buy in a reasonably good area close to schools and other amenities. Really downmarket dwellings, although cheap, seldom appreciate in value unless the whole precinct is bought out.
Buyers should seek out unrenovated properties which under their ownership can be gradually upgraded and, in particular, given kerbside appeal. Special attention, added Clarke, should be paid to kitchens and bathrooms as it is here that the radical improvements can be made. As the average buyer is fairly conventional, neutral colours in subdued earthy tones should be selected for the refurbishment rather than the striking colours favoured by the bold.
First time buyers, said Clarke, are often intimidated by their banks. They often do not realise that the interest rate is not fixed: it can vary from bank to bank and if the buyers have clean credit and employee records they might well be able to secure rates 1% or even 1,5% below prime.
Do not let the bank convince you that because you are a first time buyer you cannot qualify for a good interest rate. If the first bank you approach has this view, try others.
Article by: www.rawsonproperties.com