This is why it is so important for people to take their time when making the decision to purchase a property and to consider all aspects that could have an impact on that decision, says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
"For the majority of the population, buying a home will be the largest financial purchase that they will ever make and the property itself is likely to be their largest asset. Many place more value on owning a home than any other type of investment," says Goslett.
"However, there are a number of factors that should be carefully considered before a consumer can realise their dream of becoming a homeowner. These aspects are often out of the consumer's control, but will have a bearing on the property market and should influence the decision to purchase a property."
Potential buyers should make themselves aware of these factors before they set out on their journey to buy a home. "It is important to look into these influences as they can change the market dynamics and the environment in which would-be home-owners find themselves. Understanding how these factors control or change the property market will help to empower potential buyers with the knowledge to assess the changes they need to make in order to make a sound property purchase decision," says Goslett.
Issues such as rising electricity tariffs, the price of petrol and the rate of unemployment will all have a bearing on the housing market. This is because these economic factors place pressure on the population and their affordability ratios. Needless to say, if the country's economy is struggling or experiencing negative trends, it will impact on consumers and their ability to afford a property purchase.
Before the global recession impacted South Africa, the National Credit Act (NCA) was introduced to nullify the effects to the economy as much as possible. While the NCA did have the desired effect, it also brought about much tighter qualifying criteria for home loan applicants. As a result the bond approval rate decreased from around 80% to below the 50% mark.
Most consumers who purchase a home are reliant on the bank to finance the deal, and as result they are heavily affected by the rise or fall of the prime interest rate. Even if the home-buyer opts to link their bond to a fixed rate, the rate they are given is still influenced by the prime rate.
An increase of 1% in the prime interest rate will result in a monthly bond repayment increase of R657.76 per million. Increases in the interest rate generally slow the market and affect buyer's affordability levels.
With the introduction of the NCA a prime example, legislative changes can have a massive impact on the property market and how business is concluded. Over the past few years there have been several legislative changes that have influenced the property market such as the Credit Amnesty Bill.
"Although buyers cannot control external factors, it is important that they take them into account when making their property buying decision. Wherever possible, buyers should do their research and make sure that they are as well informed as possible before they take the final steps toward becoming a homeowner," Goslett concludes.
