Will 2020 turn out to be the best buyers' market in decades?
Category Property
The property market has arguably been more in buyers' favour for the last year or two. There was adequate stock of property on the market, the transfer duty threshold was lifted by R100 000, loan approvals were higher than they had been in years and interest rates were lowered. This was all before the pandemic took hold of our country.
Now with the COVID-19 pandemic and the resultant lockdown's effect on the economy, the question becks whether or not 2020 will in hindsight turn out to be one of the best buyers' markets in recent South African history?
At the time of writing, the cut in rates have resulted in the prime interest rate being the lowest in over four decades. The reduced interest rate is creating more and more opportunities for buyers to enter the market, as lower borrowing costs are improving affordability across the board. It is also proving to be welcome relief for property owners and means that less distressed sales will likely flood the market. While some may think that a saving of R648 in monthly repayments on a R1-million bond is something inadmissible, at the end of a 20-year repayment period, the saving will amount to more than R150 000.
Another benefit is that banks are lowering the requirements for home loans to assist more citizens in entering the market. The minimum monthly income for a R1-million loan to be considered, which used to be R33 000 before the recent series of interest rate reductions, has been lowered by around R5 000 per month. This means that individuals from a lower income bracket will now be able to enter a wider market.
In certain segments of the market, it may now just swing the argument in favour of buying rather than renting.
The current market conditions certainly favours buyers who has been largely unaffected by the lockdown. Taking advantage of record low interest rates and adequate stock may just prove to be the perfect opportunity to enter or wisely invest in the property market.
The most important thing now is for buyers and sellers alike to keep their heads about them and make smart investment decisions that will ultimately help strengthen the economy.
Author: Meridian Realty
