The property market is buzzing with optimism as experts predict potential interest rate cuts in both September and November. For estate agents and investors, this could signal a significant shift, providing new opportunities for buyers and boosting market activity.
There’s no denying that the property market is feeling the pressure. Higher-priced homes are flooding the market, while rental demand is soaring as many homeowners struggle to keep up with bond repayments. This has led to longer listing times, with properties now spending an average of 92 days on the market, compared to 69 days in 2015.
First-time buyers, in particular, are facing affordability challenges. With rising interest rates and stricter lending criteria, many are finding it harder to enter the property market. The situation is further complicated by the increase in distressed properties, as more homeowners fall behind on their bond payments.
While the current market conditions might seem daunting, there are strategic moves that buyers and investors can make to position themselves for future success. Here’s how to stay ahead of the curve:
Stay Informed and Ready
Waiting for the perfect opportunity might leave you behind. Encourage your clients to stay informed, get prequalified, and be ready to act when the right property appears. This will allow them to move quickly in a competitive market.
Consider Joint Bonds
For those struggling to meet bond requirements on their own, joint bonds can be an effective solution. Co-owning property with friends, family, or partners can maximize buying potential and share maintenance responsibilities. However, it’s crucial to have clear contracts in place to protect everyone’s interests.
Here are some key financial habits to help buyers ensure future bond approval:
Maintain a Healthy Credit Score: Remind your clients that missing payments now could impact their future bond approval. They should prioritise making full debt repayments on time to maintain their credit scores.
Avoid Taking on Additional Debts: Advise your clients to steer clear of new credit purchases. With high interest rates, any additional debt could affect their disposable income and affordability levels.
Build a Stable Employment History: A consistent employment history of at least 6-12 months is often required by financial institutions. Clients should avoid changing jobs just before applying for a home loan.
Focus on Rentals
While property sales may have slowed, the rental market remains strong. Tenant payment behaviour is steady, despite the financial strain on many South African households. High interest rates are keeping many tenants from transitioning to homeownership, which bodes well for the rental market in the near future.
Encourage your landlord clients to prioritize the placement and retention of quality tenants. Regular maintenance and improvements will also help protect their rental assets’ long-term value.
Though the market has been tough, it won’t stay that way forever. Those who make informed decisions now will be well-positioned for future success. With interest rate cuts on the horizon, the property market could be on the brink of an upswing.
Estate agents play a crucial role in guiding their clients through these challenging times. By staying informed, you can help them make the most of upcoming opportunities and ensure they are ready to flourish when the market turns in their favour.