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When is the right time to buy a home?

Buying a house is a thrilling experience for first-time and experienced buyers alike. Thanks to the dynamic nature of the property market, you’re likely to face differing conditions and factors that influence your decision-making. Take, for example, the record-low interest rates in 2020 that spurred the market into action, enabling many sellers to get higher prices than they might have a year earlier.

An important lesson from these unforeseen changes is that it's very difficult to make accurate predictions on whether prices will go up or down. That alone makes it difficult to guess when it's a good time to buy or sell your home, and considering the large sums of money involved, you want to be sure you're making the right decision.


Research is your friend

Coming to a decision on whether to buy is not much different from deciding on a new phone, television or lounge suite. But the stakes are obviously much higher when buying a house, because of the costs involved and the much longer financial commitment. You’ll want to do as much research as possible to make sure that you’re getting what you want. Most importantly, you must understand all the costs involved and how that will affect your budget.

Fortunately, we have many tools at your disposal that can help you get a clearer picture of whether it's a good time to buy. For example, our preapproval tool helps you determine what loan amount you could qualify for, and our Home-buying Toolkit on the Nedbank Money app helps you search for properties for sale in South Africa and gives you free property reports that give detailed information on homes you might be looking at.

Here are 3 different factors that you can and should research to make an informed decision.


1. Affordability

Whether you can afford to buy the house you want is based on several factors. The first of these is the house price, followed in short order by interest rates and your household income. You can get an accurate picture on the affordability of your dream house by using our preapproval tool to calculate what size home loan you can afford.

Rather than feeling overwhelmed by this process, take your time to become comfortable with all this information

An important consideration in this equation is the interest rate, which fluctuates based on the state of the economy. It can therefore be difficult to predict and you’ll need to check news reports or economic projections to get an idea of whether rates are likely to stay the same, climb or decline in the near future. Reading reports on the economy is not to everyone’s taste, but they remain the best way to stay informed on what the future may hold.

Or, you can speak to real estate experts who should have their finger on the property market pulse. Understanding what interest rates are doing is important, because your monthly repayments will be higher when interest rates climb, and can fall if the rate is lowered. All of which means that the interest rate directly affects how easily you can afford your monthly repayments.

The final factor that affects affordability is your income. Not surprisingly, the more you earn the more you can afford to spend on your home loan every month – on condition that your other expenses stay in check.


2. Market conditions

You may have heard the terms a buyers’ market or a sellers’ market, which are used to summarise the state of the market. In the first scenario, conditions favour buyers because there isn’t enough demand. Sellers may therefore have to sweeten the deal by lowering their price in the hope of attracting buyers. In a sellers’ market, the opposite is true because there are more interested buyers looking for a home. In this scenario, sellers can get or maintain a higher price because there are enough buyers bidding for limited housing stock.


3. Location, location, location

Something you will learn quickly in your research is that house prices and prospects differ depending on the province, region, city or town, suburb and even the street that you’re interested in. It therefore pays to take some time to get a better idea of local conditions. We’ve made this simple an easy for you by making free property reports available to you on our Home-buying Toolkit available on the Nedbank Money app. You can get a wealth of information here, especially if you choose to download property reports on the house or suburb you’re interested in.

Once you invest time in researching markets and neighbourhoods, you’ll also realise that the home-buying process can be lengthy. It’s not uncommon for the research, searching, finding and buying to take 12 months or more – all depending on the factors mentioned above. Rather than feeling overwhelmed by this process, take your time to become comfortable with all this information and view it as an investment of time to make sure you’re making the right decisions, at the right time.