18 Feb 2013
Although the real estate market has seen many changes over the recent years, one thing that hasn’t changed is the fact that first-time buyers are an intricate part of the housing market globally.
This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who points out that First National Bank’s property figures show the number of first-time buyers has increased and now accounts for nine out of 10 buyers in the affordable housing sector.
Goslett says because they are such an important part of the market, it is vital to know what they are looking for in a property. While affordability is a key factor for most, many are looking for homes close to their workplace and amenities, as well as to major transport routes. Some first-time buyers also want homes that are large enough for them to be able to expand their family at a later stage.
More first-time buyers are gaining confidence in property as an investment and are eager to get their foot on the first rung of the ladder, Goslett says, adding that sentiment seems to be improving and consumers are excited about the housing market again. He says many have realised that housing prices are going to increase and they understand how low the current interest rates are. "Homeownership over the long term is viewed as an excellent way to provide stability, build up equity and formulate a solid financial plan for the future."
Today’s first-time buyers plan carefully and are specific in what they require from a property. Goslett points out some factors that are becoming more important to a growing number of first-time buyers:
Room to breathe
With a long-term plan in mind, many first-time buyers want larger homes that fall within their budget so they don’t have to move when their life stage changes. Goslett recommends that buyers purchase a home that will suit their needs for the next five to seven years if possible, as this allows them to pay down their bond enough to make a profit when they sell the property. Even if a bigger family doesn't happen immediately, it is important that it is considered when looking at property. He says a versatile home will provide a sense of stability rather than become a burden when life changes.
Thanks to the vast amount of information at their fingertips, today’s first-time buyers are a "savvy bunch" that understand the importance of buying a home they can settle into for a long time. With the recession bringing housing prices to an affordable level, it has become easier for first-time buyers to get into larger homes than they could in the past. However, today’s first-time buyers are realistic in terms of what they need and are more budget-conscious, looking for homes that allow family growth without putting them in financial danger.
There are also first-time buyers who prefer to buy a sectional title unit that is easy to maintain. These buyers are often looking for a good investment property that they have the option of renting out for additional income instead of selling, if and when they need to move to a larger home. Location is an especially important factor to consider if this is part of the buyer’s future plan.
While location is a vital aspect for any property buyer to consider, Goslett says first-time buyers are putting a lot of emphasis on a property’s location and its proximity to business hubs, shopping centres, schools and entertainment facilities.
“The myriad real estate information available has allowed first-time buyers the opportunity to see how vital location is in terms of return on investment over the long term," he says. Location is the single most important factor because it can have a dramatic impact on a property’s potential for appreciation. He says location is a consideration because of lifestyle offerings and if a buyer is planning to stay in a property for a long time, they want to be happy in the area.
The right market
Irrespective of the features that today’s first-time buyers are looking for - the current market is perfect for them. Goslett says the affordable levels of house prices along with low interest rates have opened up opportunities in the market for first-time buyers who were previously unable to afford to buy property. He says these factors make owning a property a more attractive option than renting, especially considering the fact that the growing rental demand is pushing rental prices up.
If a buyer is in a financial position to purchase a home, why wouldn’t they, Goslett asks. “There seems to be no reason to continue paying rent, and paying off someone else’s bond, when market conditions are ideal for buying a first home."
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