The property market operates on an imbalance which at any one time is either skewed in favour of the buyer or the seller. At present there is a market which is in the recovery phase after an entrenched buyer’s market having been in existence. In this recovery phase, the market will begin to move gradually towards redressing this sharp existing imbalance in favour of the buyer. The market in Cape St Francis has been moving towards becoming a Seller’s market but with the COVID-19 state of disaster and the current lockdown the mood for investment in 2nd homes has changed considerably making this as one of the very best times for a prospective buyer to enter the market. A buyer’s market is determined by the following factors: serious & negotiable sellers due to economic stress, an increasing number of listed properties both providing the buyer with more choice and negotiability of the listed prices.
In a buyer’s market the buyer has a significant amount of leverage and if one believes the age old adage of “Making money from property is all about when you get in and when you get out”, the time has never been better to get in. A low entry price into the market means that when the market turns, which it will do as surely as the sun will go down at the end of each day, the property owner will realize a profit quicker on his investment as the property prices start to escalate.
ACQUIRING BOND FINANCE FOR YOUR INTENDED PURCHASE : There has been a lot said recently about bonds and the difficulties of acquiring bond finance….and most of it has been true. A lot of this has had to do the introduction of The National Credit Act [NCA] and a lot to do with the deteriorating economic situation both here and world-wide.
THE NCA basically enforced the banks to look at every loan application from the perspective of the clients affordability, as opposed to the client’s gross income. This means that car repayments, other bonds commitments, clothes accounts etc are taken into account and calculated by the bank to create a client profile against which the bond amount applied for is measured in terms of affordability.
- THE LENDING CRITERIA of the various national banks change regularly in response to varying economic conditions.
- Vacant Land is viewed as a greater risk than developed property and is thus considered in this light by banks in general – at present none of the banks will lend more than 50%-60% of the purchase price of an undeveloped property [provided you qualify on your personal affordability rating] meaning that you would be required to come up with between 40%-50% [of the purchase price] as a deposit.
- Developed Property – A bond of up to 90% of the purchase price [providing you qualify in terms of affordability] is possible from most of the banks for developed properties. To calculate what your repayment rates on a specified bond amount would be, visit: ooba.co.za & use their provided bond calculator.
- FACTORS WHICH MAY INFLUENCE YOU QUALIFYING FOR A BOND :
Salaried applicantsas opposed to self-employed people are considered a lower risk for a bank. A self-employed applicant would need bank statements which indicate a stable and established business for the past 2-3 years.
Poor credit records, even the smallest unpaid account from way back can count against you as this all makes up part of your profile that the banks look at when considering your ‘risk’ level for bond finance
Your total credit exposure. how much you owe in relation to what you earn
Non south African Residents cannot qualify for a bond exceeding 50% of the purchase price
- OTHER ‘ONE OFF’ COSTS, BESIDES THE PURCHASE PRICE, WHICH A BUYER CAN EXPECT TO PAY:
Transfer Costs : These are made up of: TRANSFER DUTIES– taxes paid to the South African Government and are applicable in the case of all sales of immoveable property except where the seller is a registered VAT vendor.
TRANSFER FEES are the costs paid to a conveyancing attorney for his/her efforts at transferring a property into the name of the Purchaser.
TRANSFER DUTIES AS OF 1 March 2016, and apply to all persons (including Companies, Close Corporations and Trusts):
| VALUE OF PROPERTY
|0 – 900 000
|900 001 – 1 250 000
| 3% on the value above 900 000
|1 250 001 – 1 750 000
| 10 500 + 6% of the value above 1 250 000
|1 750 001 – 2 250 000
| 40 500 + 8% of the amount above 1 750 000
|2 250 001 – 10 000 000
|80 500 + 11% of the amount above 2 250 000
|10 000 001 and above
|933 000 +13% of the value exceeding R10 Mill