A question that I get asked regularly is when is the best time to buy a property?
This is something that I have pondered upon, looking back to 2002 when I made my 1st sale. It was a three bedroom house, not modern by todays standards but it sold for a competitive price of R285,000. (Above the average selling price in the area) I remember the buyers being in their early 30s, newlyweds at the time and the property was stretching their budget.
Since then we experienced the market of 2004 2006 where the average increase in house prices was between 30-40%. The arrival of the National Credit Act and the subsequent global recession quickly put the brakes on house price growth. Interest rates climbed and people that had bought in the Boom period struggled to make payments. This resulted in homes being repossessed and an increase in auctions.
Investors saw opportunities and purchased properties, considering that prices of properties dropped up to 30% in some areas, and sales volume decreased in certain suburbs. Some will tell you that the best time to buy is when the economy is struggling.
Since then the market has improved. Many will tell you that we are not out of the woods yet but there is a steady demand for housing and the prices are on the rise. A clear sign of improvement is the fact that developers are building and achieving quick sales on quality units. I once heard that the number of building cranes one sees in a country reflects the its economic strength. One just needs to drive through our city centres and suburbs to see that there is an appetite for building and investment.
What has all this got to do with when is the best time to buy?
Well lets consider the timeline of my first sale's value:
Year Average Price* Economy
2002 R260,000 Good
2004 2006 R950,000 Excellent
2007 2011 R850,000 Poor
2012 2015 R1,100,00 Good
Present Day R1,650,000 Good
*Average price calculated with average sales price in the area
The proof is the fact that through the last 15 years the value of the property is six times the original value. The markets have escalated and dropped, economies have improved and worsened, yet the price the value of the property has increased,
So what is my answer when I get asked the question?
Buy now. Don't wait. The fancy car can wait. Buy the house and budget so that you can keep it. Property is long term and I have noticed one thing: My clients that have bought and paid off their properties live a far more comfortable lifestyle then those that decided to rent. Alternatively buy small and upgrade when you can, but whatever you do. BUY!
Director Realty Atlas Property Group
Author: Foti Sousalis