The right timing is right now

Don’t get too hung up on trying to “read” market cycles or interest rate trends, or you may miss the property boat altogether.

That’s the advice of BetterBond Home Loan CEO Shaun Rademeyer to young people planning to buy their first home this year. He says that in buying a home, as in purchasing shares, market timing is not the only factor that should be taken into account.

“While buying low in the stock market is certainly important, the reality is that the most successful investors don’t rely on being able to buy stocks at the very moment they reach their lowest price, or sell at the very top. They also look at factors such as prospects for growth or the sustained delivery of earnings.”

And prospective homebuyers should look at property purchases in the same way, he says. “Apart from interest rates and home prices, they need to consider variables such as the type of home they want, price trends in the area they prefer, possible renovation costs, transfer costs and the availability of finance, and be prepared to jump in at the moment when most of these seem aligned in their favour.”

Realistically, there is very little chance of achieving “perfect timing” in the property market, Rademeyer says, “so those who are keen to buy their own homes should rather concentrate their energies on finding a home that suits them in an area with good growth prospects, at a price within their loan qualification limit – because their chances of doing so right now are pretty good, but may not stay that way for long because stock levels are shrinking in many areas and putting prices under pressure.

“Similarly, while interest rates and home loan qualification levels are currently at their lowest levels in decades, they are widely expected to start moving upwards again this year and making home ownership less affordable once more.”

Meanwhile, he says, it is worth noting that while interest rates are bound to go up and down during the term of a home loan, buyers who take the plunge usually find that the actual repayments tend to average out, while the value of their property tends to keep rising, and gearing continues to work in their favour.

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