Have parents taught their children about the ins and outs of buying property and what to do?
“What would I tell my children, and what have I told my children about buying a home?”, asks Lanice Steward, managing director of Knight Frank Residential SA.
Many young adults in their early twenties might think they are too young to buy a property, but Steward says that this is a possibility if you are earning a steady income and have a reasonable deposit to put down. Rather than “wasting” money by paying rent each month, consider buying something for the equivalent in what you would pay on renting each month.
While many young adults will want to move out and live on their own and rent, the best thing to do is to stay with parents for as long as possible and save a deposit to put down on buying a home. If buying into a new development, the deposits are sometimes as low as R10 000, which is achievable for many, she said.
When it comes to types of homes to buy, Steward said she would recommend looking for a new home in a development, where in most cases all transaction costs are included in the price. The benefit, too, of buying in a development is having the body corporate or HOA take care of communal ground and exteriors of the building, which young adults cannot often afford or have the time to do on their own.
If buying in a development, however, advises Steward, read the sales agreement very closely, and make sure that transfer only takes place on completion of the unit and not before.
“As a young buyer, you don’t want to be stuck for a place to stay while waiting for the unit to be completed and still have to pay the bond repayments or interim interest while waiting,” she said.
Many would probably say it’s impossible to buy as early as in your twenties but if a person is paying R8 000 in rent, they could afford a home worth around R900 000, she said. This is taking into account that the person can pay a R10 000 deposit and the bond is paid off over 20 years at 9% interest.
However, if the buyer looks at something cheaper, say, for example, an apartment for R650 000 (which Knight Frank has on its books in Kirstenhof). If a R10 000 deposit is put down, and the bond is calculated at the same interest rate and the same repayment period, the monthly payments come to R 5 758.25, which is more or less what is being charged in rent in the same area at present.
“While many would say there is nothing decent under R1 million right now,” said Steward, “surprisingly, there are, and not only apartments but freestanding units as well.”
On Knight Frank’s books now, there are quite a few properties that are good propositions in that they have two bedrooms (which is better as it is then possible to share the unit to subsidise the bond) and they have either parking bays or garages, said Steward. There are properties for sale in areas such as Woodstock, Hout Bay, Wynberg, Southfield, Tokai and Kirstenhof.
Asked to give a few examples of homes among those listed, she mentioned:
• A two bedroom one bathroom apartment in Hout Bay, priced at R950 000.
• A north-facing two bedroom, one bathroom apartment in Wynberg priced at R895 000; and
• A two bedroom, one bedroom apartment in Tokai in a complex with a communal pool, priced at R965 000.
Apart from the investment being paid for, there is also the very good capital growth on property investments being achieved in Cape Town, which is currently around 5,5%, because the year on year prices are increasing by around 14,5% at present, said Steward.
“Many young adults might need their parents’ help to buy a home, but this might just be in the form of signing surety or buying as a co-owner. This is something that young people could achieve, with a little help, and not necessarily monetary help, from their parents,” she said.
Article from: www.knightfrank.co.za/
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