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  1. #11
    User
    Join Date
    Jun 2015
    Location
    Cape Town
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    259

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    Quote Originally Posted by Schizzo View Post
    Hi guys

    Does anyone have any tips for someone that wants to get into the property market?

    I really don't know how people do it, I've been watching the ads for a while but property prices are insane. From what ive read you can only qualify for a bond repayment = to 30% of your gross income. That leaves me under the 700k bracket,houses in Parow which is not even a decent area start at like R1.2 million.

    Is there a trick to this i am missing? With the equation above i need R35k a month to get bond of 1 million

    How does people get bonds for 2+million rand houses
    Rent as cheaply as you can, save as much as you can and get together cash for a deposit and transaction costs. A rising cycle of interest rates will klap recent buyers, especially if you could just afford the payments when you bought, watch out for this in the next while. Rather be renting when the interest rates are rising and look for distressed sales round about when the interest rate peaks.

  2. #12
    User
    Join Date
    Feb 2013
    Location
    Capetown
    Age
    33
    Posts
    77

    Default Re: Capetown property market

    Quote Originally Posted by SteveFW View Post
    Rent as cheaply as you can, save as much as you can and get together cash for a deposit and transaction costs. A rising cycle of interest rates will klap recent buyers, especially if you could just afford the payments when you bought, watch out for this in the next while. Rather be renting when the interest rates are rising and look for distressed sales round about when the interest rate peaks.
    This is where we are currently at, renting a huge 2 bedroom flat with a garage for R4400 in Parow valley, wont get anything similar for that price range. Currently pushing all extra cash into my vehicle payments to get that done as soon as possible, once this is done saving will go alot faster

  3. #13
    User
    Join Date
    Jun 2015
    Location
    Cape Town
    Posts
    259

    Default Re: Capetown property market

    Quote Originally Posted by Schizzo View Post
    This is where we are currently at, renting a huge 2 bedroom flat with a garage for R4400 in Parow valley, wont get anything similar for that price range. Currently pushing all extra cash into my vehicle payments to get that done as soon as possible, once this is done saving will go alot faster
    Then you are already taking the right steps. House purchase is usually done using cash/savings+ proceeds of sale of existing house+ bond (except in CT where half the okes seem to have a trust fund???), so you are right, that first one where you only have savings+ bond is the most difficult one, after that you can always use the accrued value in your existing property as funding. Also remember to factor in the transfer duty, any agents com and conveyancing costs of buying and selling, because this has an effect on the net increase in value of your property that you can realise.

  4. #14
    User
    Join Date
    Jan 2018
    Age
    27
    Posts
    83

    Default Re: Capetown property market

    We bought a new development flat for just under 600k. 2 Bedroom decent area in 2013. lived there for about 3 years. Sold for R800k in 2016. Used the profit for deposit and transfers. Now in our house we bought for 1.1 m is valued at 1.7 after a few minor changes of about 80k. But, buy for less than you can afford. If you can afford 800k , buy for 600. Pay that extra money in on your bond and pay it off quicker. Or save that extra for next spots deposit. You are looking at an end game.

  5. #15
    User
    Join Date
    May 2015
    Location
    J-Bay
    Age
    38
    Posts
    1,137

    Default Re: Capetown property market

    My 2c

    Tips for getting in can vary, depending on your risk appetite, age etc. but I believe timing is part of the key that unlocks the puzzle.

    As an example I "bought" a development property on spec in St Francis as a 1st year article clerk that looking back I would have struggled to afford if I hadnt sold it before final transfers took place, so it only cost me a 10% deposit. The profit I made was 4X my annual salary as a 1st year. However, if I had held on a year longer hoping for more gains I would have taken a R200k bath at least as the prices tanked. Timing resulted in almost a R500k swing. This works both ways. I have also been on the receiving end.

    The second trick is not to be "forced" into to feeling you have to make the purchase. This may sound ridiculous, but only pay less than what the property is worth. There is no gain to be had by paying market value or above. The more cash or pre-approved funding you have the "easier" it is to do, but there will always be situations where people don't have the time to wait for a sale. Look for hidden equity which can be unearthed through minor cosmetic changes.

    My last point which doesn't necessarily relate to entry into the market but I see it as being an issue mates of mine have had over the years. As you become more successful and earn more money, there seems to be a common theme of "upgrading" their homes. I am not talking about moving from a 55sqm townhouse or flat because you have 2 kids into a house that can accommodate you, but merely upgrading for upgrading sake wither by moving or overcapitalising in current home to keep up with the guy next door or because you can now "afford" to. To each their own but I see it as potentially problematic. In this instance you can replace the word "house" with "car" as well. Part of the reason why someone earning R75k has not that dissimilar a disposable income after costs as someone making R30k...the more you make, the more you spend. Difficult cycle to get out of.

  6. #16

    Default

    Quote Originally Posted by curious george View Post
    Maybe I am misunderstanding govt intentions and the unintended consequences, I suspect denial is a viable option for some.
    Yawn.

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