IS THIS THE TIME TO BUY?

With the arrival of Covid-19 and the subsequent effect on the economy, does it still make sense to enter the property market and to commit to buying your first property, or to build a property portfolio? If so, what are the best ways to go about this and what opportunities exist in our local area?

Most people place great value on owning property because of the security of tenure it offers your family, the opportunity it provides to create wealth, as well as the potential to feel proud about owning the property you live in.

Residential property has proven its mettle during the Covid crunch. According to TPN, about 85% of tenants were in good standing during the first quarter of this year, while, according to PayProp, the number of tenants in arrears hovered around 20% in the first three months of this year and increased to 24% in April. This may not sound fantastic, but it’s a lot better than the productivity hit many companies have taken over the past few months. This speaks to the resilience and sustainability of residential property as an investment class.

Whether now is the right time for you to buy a property depends on whether you have a positive earnings outlook, and whether you intend to stay in, or keep, your property for at least the next five years. If this is the case, now may be the perfect time to buy – especially given the extremely low interest rate environment.

The prime interest rate has dropped 2,75% from 9,75% to 7% since the beginning of this

GARETH BAILEY LOOKS AT THE PROS AND CONS OF GETTING ON TO THE PROPERTY LADDER DURING COVID

year making it the cheapest time to finance property in about 50 years. A R1,2- million property will now cost about R2 000 less a month in monthly instalments, dropping from around R11 300 to R9 300. Another way of looking at this is that you can now buy a property that is roughly 20% more expensive for the same monthly instalment.

You may be concerned that if you buy a property now and the interest rate rises again in the near future, the property will become unaffordable. Fortunately, the economy and the property market are synchronised to a certain degree, so as long as the economy is fairly flat and in recovery mode, we should not see interest rates increasing much for the next 24 to 36 months. If you want to control your budget more tightly, you could explore a fixed interest rate with your bank which will probably cost 1% or 1,5% more than prime rate but give you certainty that you can afford the property over the next few years.

The two most important numbers that banks consider when assessing your bond application are your ID number and your credit score. These provide the bank with a lot of information to assess your creditworthiness. For example, what is the nature of the credit you have used before, and how have you conducted yourself financially? Have you lived on overdrafts and credits cards? Have you honoured credit

ABOVE: Gareth Bailey, Pam Golding Properties.

Now may be the perfect time to buy – especially given the extremely low interest rate environment

repayment terms? Your credit “history” will be an important determinant of your credit “future” and you need to demonstrate that you have a healthy relationship with it.

Although banks do grant

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100% bonds, the best approach to obtaining finance is to resist splurging and to save some money first towards a deposit as banks generally view your credit application more favourably if you have some “skin in the game”.

In terms of buying the right property, the old adage location, location, location still applies as informed buyers seek areas close to amenities such as good schools and healthcare, but also where public spaces are well kept and invite participation outdoors.

My advice to first-time buyers is to resist buying the most expensive property you can afford. This will not only mean you can cover your repayments comfortably, but will also position you to potentially find a tenant for your first property and to buy another one, taking your first step towards building a property portfolio.

Smaller, cheaper properties have the highest rental yield (rental income vs expenses) and this is another reason why you should start small, as it will be more likely to “wash its face” which means to cover its own expenses paving the way to future property acquisitions.

These opportunities do exist in our local market. For example, we have just launched The Onyx in uMhlanga Ridge Boulevard, diagonally across from the new Gateway Private Hospital, which offers stylish one bedroom apartments from just under R1,2-million. There are three outdoor areas within the building, including a rooftop swimming pool and braai area.

While many first-time buyers may be apprehensive about committing to large ticket items like property in the current Covid environment, others will seize this unique opportunity to get on to the property ladder at the cheapest interest rate in 50 years. * Prime investment opportunity in KZN’s sought after coastal belt. Trendy urban loft apartments as well as 1 and 2 bed units on offer.

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Here's to your HEALTH

WINE EVERY DAY AND A NAP EVERY AFTERNOON –

THAT’S MY KIND OF “RECIPE” FOR TAKING CARE OF MY HEALTH, CHUCKLES DARREL BRISTOW-BOVEY

What are you “What?” said my partner suspiciously. doing?” said “On the Greek island of Ikaria – which has my partner as I the highest percentage of people in the world reached for the over the age of 100 – residents all drink two wine. “We’re going glasses of wine with lunch. Fancy that!” to look at paint swatches now.”

“What am I doing?” I replied somberly. “I’m looking after my health.”

She made a sound she sometimes makes when talking to me – like a lawnmower being pushed across a lawn when it unexpectedly encounters a pebble.

“What?” I said. “Do you think I’m looking forward to this large tumbler of chilled, white wine? No, no – this is medicine.”

I slugged it down virtuously, a soldier doing his duty.

It was my partner’s fault – she’s always bringing home dietary books and telling me to eat better so I can live longer, as though “longer” means the same as “better”, and using long scientific words no one All these understands, like “cholesterol” or “marzipan”. newfangled Mainly I just nod patiently and promise to stop squeezing tubes of Nutella into my mouth pretending it’s toothpaste. But ideas like calories or carbohydrates are just then one day, during half-time in the rugby, fads. It’s not what we I picked up one of her books and starting flicking through it. Well! What a revelation! It was a book called The Blue Zones – eat that hurts us – it’s worrying about it Lessons For Living Longer From The People Who’ve Lived The Longest, and it’s about She snatched up the book and scowled those various places around the world at the page, where I’d helpfully circled where people all live into their 90s and more. the relevant information with a ballpoint

“Well!” I said, turning the pages. “Well, pen. It made perfect sense to me. The well! Interesting!” oldest person in the world is never some marathon-running teetotaler – it’s always some old French lady who smokes cigars, takes shots of brandy with her breakfast and sexually molests any young man within arm’s length. I wondered if I should start smoking cigars.

“This doesn’t seem right,” she muttered.

“Don’t be a science-denier,” I said. “In the next chapter it says they all take a nap every afternoon to lower their blood pressure and boost their immune systems. Gosh, I wish I’d become interested in health a long time ago!”

“Maybe you’re not reading the book right,” she said.

“Sorry,” I replied. “I’d like to stay and argue, but I have to finish my second glass of wine then take my siesta.”

“But the paint swatches.”

“Well, I hate to miss them, but health comes first.”

The old-timers have it right, I reflected, stretching out happily on my bed. All these newfangled ideas like calories or carbohydrates are just fads. It’s not what we eat that hurts us – it’s worrying about it. From now on life is going to be both long and happy.

But there are good times to take a nap, and times when it’s a bad idea because it gives your partner the opportunity to read the medical evidence for herself. When I strolled through later she was jangling the car keys.

“Ah, you’re up!” she said. “Let’s go.”

“Go where? The paint shop’s closed.”

“To visit your family,” she said. “In the book it says another thing all those places have in common is very strong family bonds.”

“Wait a minute … ”

“Every day they spend time with members of their near and extended family.”

“I didn’t read that … ”

“Every single day. It’s what the book says.”

It’s good when a household can agree on a health regime. In mine, we have agreed to donate The Blue Zones to our local charity bookshop. *