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P R O P E R T Y THE FLISP subsidy can be used as a deposit to increase the purchase price, reduce e home loan or cover extra costs such as transfer fees. PICTURE: ANDREA PIACQUADIO/PEXELS
Young South Africans are defying rising living costs and buying their first homes BY BONNY FOURIE bronwyn.fourie@inl.co.za
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BUYING YOUR FIRST HOME? DON’T FORGET ABOUT FLISP
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ISING interest rates, fuel prices and the cost of living might be deterring many aspiring home owners from taking the plunge and buying property, but favourable bank lending is said to be in their favour. Interest rates are also elatively low, despite the hikes. Comcorp Mortgage Software data for May shows that 71.3% of property buyers were first-timers, a figure that is almost identical to the 71.32% in May 2021. The average age of first-time bond applicants was 37 and the average approved loan-to-value ratio was 90%. The statistics also show that the average purchase price for first-time buyers was R940 232, with the average deposit being R101 160 in May 2021. The figures were R936 827 and R97 083 respectively. The prime lending rate a year ago was, however, 7% compared to May 2022’s 8.25%. First-time property buyers continue to
dominate activity in the residential market despite recent interest rate hikes, says Samuel Seeff, the chairperson of the Seeff Property Group, explaining that this is being driven by the “favourable mortgage lending climate and low interest rate which, despite the 125bps hikes this year, remains well below the pre-pandemic level”. He says the levels of buying among people under 35 years old, as reflected in the Deeds Office data, remains high, with the buyers comprising more than a third of activity of the past year in the metros and big cities. “This includes Johannesburg (33%), Soweto (27%), East Rand (56%), Pretoria (34%), Cape Town (32%), Durban (31%), Gqeberha (30%), and Bloemfontein (35%).” Home loan approvals, Seeff says, are at “the fastest rates in over a decade”, and deposit requirements are now down to around 6% to 7% as the banks compete fiercely for a slice of the
home loans market. He adds that first-time buyers are able to secure 100% bonds plus costs in many instances and that this has been “an enormous benefit”. Nick Pearson, the chief executive of Tyson Properties, says the positive price bands are at the top and bottom ends of the market, with first-time buyers “propping up the market and creating the perfect supply demand scenario”. Properties priced at around R1.2 million, which are the ones the average South African buyer can afford, are selling quickly. “We’ve had good results coming out of Johannesburg this year. It is probably the most stable market when it comes to properties priced between R1.2m and R3m. We are seeing a huge amount of first-time buyers in this market. “We’ve seen semigration as people move from the suburbs to estates with the emerging buyers of yesteryear becoming repeat buyers who are now purchasing these larger properties.”
FIRST-TIME buyers are often faced with the hard task of saving for a deposit to put down on their first home. But a change on April 1, may help, says Meyer de Waal of MDW Inc. “Buyers can now use their Finance Linked Individual Subsidy Programme (Flisp) subsidies for a deposit, or pay for the legal fees when buying a property. This is available to all firsttime buyers who earn a gross income of between R3 501 and R22 000 per month and meet the Flisp qualifying criteria.” The subsidy can be used as a deposit to increase the purchase price or reduce the home loan to be applied for. It can also be used to pay the legal transfer and bond registration fees. “First-time buyers want to know where they stand to qualify for a subsidy before they go out house-hunting. They want the comfort of knowing exactly what one can qualify for and how to apply the Flisp subsidy to structure their finances, whether they use it as a deposit or as legal fees.” Click here to be directed to the online Flisp calculator and a free service to assist with the entire process.
DATA shows that the number of first-time property buyers in May 2022 was the same as May 2021. PICTURE: RODNAE PRODUCTIONS/PEXELS
THE DECISION-MAKING PROCESS WHEN BUYING YOUR FIRST HOME DO YOUR research before signing that sales agreement. Here’s what to consider PICTURE: ANETE LUSINA/PEXELS
WHEN purchasing a residential property, whether for your own use or as an investment, you need do a due-diligence exercise before signing a sales agreement, advises Roper & Associates. This includes: 1. A physical audit Identify all the positive and negative features/characteristics of
the property, including: • Gourmet kitchen/dysfunctional kitchen. • Sea views/poor outlook. • Tasteful internal decor/pink and purple walls. You should then separate this list into three groups: Group A – Likes/advantageous features.
Group B – Dislikes, repairs and renovations, necessary extensions. All are possible with the necessary spend (you are in control). Group C – Dislikes, disadvantages, annoyances, functional and economic obsolescence that no amount of money will improve/ repair/replace (you are not in control). This group is the most
important one and possibly the game-changer in that it is the main contributor in whether the value of your property appreciates or depreciates. The features include: • Building orientation – northfacing is best. • Stormwater control – avoid being below road level. • Avoid abundant/high embankments; and retaining walls, especially on boundaries shared with unco-operative neighbours. • Avoid noise and visual pollution, such as opposite a school or on busy/steep roads. 2. Legal audit Identify the limitation of your “real rights” on the property by researching/obtaining: • Title deeds and the surveyorgeneral’s diagram that shows: 1. Servitudes (that is below ground pipelines and so on). 2. Road reserves. 3. Legislated restrictions – usage. 4, Conservation areas. 5. Water rights. • Town planning controls – maximum allowable development of: 1. Building/ floor area. 2. Height. 3. Building lines.
4. Usage (see websites of municipalities, conservation of land – DMOSS, and conservation of buildings – AMAFA). 5. Local authority-approved architectural plans. 6. Encroachments (by the neighbours or affecting the neighbours). 7. Body Corporate/ Home Owners Association rules and regulations including: – That sectional title plans are up to date. – Security of tenure over exclusive use, parking bays, storage, gardens, and so on. – Copies of Body Corporate minutes of meetings. 3. Financial audit • Municipal rates – arrears or overvalued (high rates). • Body corporate levies – arrears or anticipated special levies (due to inadequate financial planning) – obtain body corporate financials. • Body corporate financial status (savings fund) – competent management. Roper & Associates says you need to make property purchasing decisions based on sound, logical research as opposed to emotional impulse.
