How to avoid getting priced out of the housing market

Article summary

• The South African property market is in good health despite rising interest rates, inflation, and loadshedding.
• 100% home loans provide an option for first-time home buyers who can’t afford a deposit.
• Using a home loan comparison service such as ooba Home Loans will help secure lower interest rates on your home loan.

Despite inflation, interest rate hikes, and loadshedding, South Africa’s property market is in good condition.

But what does this mean for prices?

House prices in 2023

The market is still benefitting from the pent-up demand that was unleashed in the wake of COVID. How long it will stay that way remains to be seen.

Interest rates and inflation may slow down demand, but the larger pool of houses available will only lower prices.

Demand for larger houses

More people are adapting to the work-from-home lifestyle by buying larger homes, and in many cases, moving to remote, scenic areas; particularly coastal areas.

Larger homes mean higher prices, but we are still in a buyer’s market, so buyers looking to semigrate should take advantage of the situation while they can.

Afford your dream home

If you’re a first-time home buyer, whose resources are already limited, you’re probably wondering how you’re going to get a foothold in the property market in this climate. Well, here are some of the options you have available to you:

1. Get a 100% home loan

• For many first-time home buyers, the deposit is the most challenging part of the home-buying process. It’s hard to muster the resources needed for the down payment, which is usually 10% to 20% of the purchase price.
• The 100% home loan removes the need for a deposit. And since banks are more likely to approve home loans at the moment (the approval rate is above 80%) your chances of obtaining a 100% home loan are solid.

2. Improve your credit record

• Your credit record is a three-digit number that the bank uses to gauge your financial situation The higher your credit record, the less of a risk the bank considers you to be.
• So a good credit score (610+) will save you money by getting you lower interest rates on your home loan.

More information on credit scores

• 781 to 850. Excellent.
• 661 to 780. Good.
• 610 to 660. Fair.
• 500 to 610. Poor.
• 300 to 499. Very poor.

If your credit score is low, we can advise you on how to improve your credit record. For example, you could pay off debts, and reduce the percentage of available credit you use.

You can use our free, online tool, the Bond Indicator, to find out your credit record.

3. Use a home loan comparison service

• A home loan comparison service, such as ooba Home Loans, will submit your home loan application to multiple banks, and negotiate with the banks on your behalf.
• We will then come back to you with the home loan packages that the various banks have offered, allowing you to compare deals and choose the one with the lowest interest rates.
• Naturally, the opportunity to get the lowest possible interest rate makes a home loan more financially viable. You don’t even have to pay us for this, as we earn from commissions.

We also offer a range of tools that can make the homebuying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.