Market primed now for upgrade buyers
Category RealADVICE
Homeowners who would like to upgrade to a bigger or better property should find it easier to do so following the interest rate increases announced after the last three meetings of the Monetary Policy Committee, which have seen the prime rate rise to 7,75%.
So says Gerhard Kotzé, MD of the RealNet estate agency group, who notes that the effect of rate increases generally is to lower demand, increase the supply of homes for sale and prompt home sellers to rethink their asking prices - in that order.
And as the market is currently experiencing these shifts, now is the time for upgrading buyers to seize their opportunities.
"In addition, thanks to the huge influx of first-time buyers, prices have been rising faster at the lower end of the market than at the upper end for most of the past two years, creating the opportunity for astute owners to move up the property ladder by selling their first homes at a substantial profit and using most of this as a deposit on their upgrade home in order to lower their bond requirements - and repayments."
He says that sales volumes are dropping now following the record volumes seen in the past two years, and that asking prices at the higher end of the market are already consolidating as a result. More inventory is also coming to the market as some homeowners experience difficulty in keeping up with home loan repayments at the new rates, or seek to downsize to cut their overall cost of living.
"We find that there is also much more readiness on the part of sellers now to negotiate and reach agreement with prospective buyers, and we expect this to become even more prevalent in the next few months as sellers get more anxious about further interest rate hikes, or eager to upgrade themselves."
Kotzé says there are all sorts of reasons for people to contemplate moving to a bigger or a more upmarket property, such as the need for more space to accommodate a new home business, growing children or ageing parents, a change of lifestyle or the desire to live in a more prosperous area.
"However, while we would always encourage them to do so if they can afford it, we also believe they should first consult a reputable mortgage originator and get prequalified for a new home loan, so that they have very clear idea of what their upgrade spending limit actually is.
"Before you decide on an upgrade, you will of course also need to consider your other debts and expenses as well as long- and short-term savings goals like university for your children and your own retirement - and leave yourself some leeway to cope with any future interest rate rises."
And lastly, he says, you will also need to be realistic about what you can expect to get for your existing home, and to enlist the help of an experienced, knowledgeable agent to market it properly, so that you can make your move as soon as possible.
Author: RealNet
