Now is a great time to buy or sell your property

Now that the budget has been tabled and an election date has set, the outlook for the year is a little clearer, but it is still characterised by uncertainty.

And when it comes to the long-term nature of residential property investment, short-term uncertainty is never good for the market.

That would be a mistake, I believe. However, good the reasons for delaying your decision to buy or sell may seem, the truth is that the current market offers value for both sellers and buyers – if they know where to look.

One factor to consider is the general economic climate. Yes, our growth looks set to remain disappointingly sluggish (the budget revised the growth estimate for 2023 to 0.6%, with 1.6% for the next two years), but at least inflation is now within the SA Reserve Bank’s preferred range of 3%-6%.

Most economists believe interest rates will drop by between 0.5% and 1% during the year. Reduced interest rates will mean reduced mortgage payments.

Another important point is that the banks are lending money for purchasing property. Even more exciting, they are competing quite vigorously against each other for a reduced pool of buyers.

It’s a great time to be negotiating a favourable repayment rate on your home loan. For buyers, this is a great time to buy a first house or to get more value for their property buck.

Ooba, one of the bigger lenders, reports that 48% of all loan applications are coming from first-time buyers.

Although this figure is down about 8% compared to a few years ago, it shows people are still buying homes, and it feels like people buying their first home are making a bet on this country.

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 Access to bank loans to buy property

 Access to bank loans needed to buy property is one component of the value equation.

As important is the fact that, in all but a few areas, property prices have been steadily declining for a number of years.

This means buyers, including first time buyers, can get a foothold in the property market at prices reminiscent of five and, in certain areas, even 10 years ago.

With this in mind, it’s no surprise that we’re seeing lots of buying and selling activity in the mid-market range in most segments. In short, it’s very much a buyer’s market.

Buyers realise they can obtain more value for their money in this market, and they are deciding what that value is.

For some, it’s a bigger property or better finishes for the same money, while for others it’s being able to downscale in terms of price, while still getting all the features they truly want.

On the flipside, of course, sellers are under pressure in such a market, but they’re not necessarily as disadvantaged as it might appear.

If you’re selling to rebuy in the same type of market, the same value calculation applies. Your property might not fetch what you think it’s worth, but then the property you buy will also be cheaper.

In other words, it’s all relative: if you sell in a soft market, make sure you buy in a soft market so the value equation evens out more or less.

But what about if you’re moving to a more expensive market – for example, if you’re semigrating to the Western Cape? Because properties there are more expensive than in Gauteng, you might feel tempted to hold off selling your Gauteng property until prices improve.

That thinking seems to make sense but it’s actually false logic. When the property market improves and Gauteng prices rise, the Cape market will rise faster and higher than Gauteng.

So while you may have realised a higher price for your Gauteng property, the equivalent Cape property will have gone up even more, and the gap you will have to cover is even larger. v Jawitz is CEO of Jawitz Properties

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