As many South Africans juggle costs to try and keep up with their bond repayments in the face of increased interest rates, Pam Golding Properties has urged them to do whatever they can to stay in the property owners’ market.

PGP’s MD for the Western Cape metro region, Laurie Wener, says these may be difficult times for property owners, but they should keep in mind a long-term view of their investment.

“Yes, some owners can no longer afford their existing bond repayment plan,” says Wener, “but there is no need to rush into a sale. While it may seem more cost effective to move into the rental market, they should remember that getting into the ownership market in the first place is quite likely to be their biggest financial leap. It would be a pity to have achieved this leap, then to go back to square one and have to face it all over again in a few years’ time. We would strongly advise people in this situation to rather consider buying down than selling out. If this is the property in which you live, it may mean compromising your lifestyle for a while, but it will make the path back upwards again much easier."

Talk to your bank before panic selling

Wener further advises homeowners to talk to their financial institutions before panic selling. “If your mortgage repayments are too steep to cope with, don’t underestimate your bank’s willingness to help you. Most banks would far rather restructure a payment plan than repossess a property. You may find that you can extend the term of your loan, thus reducing the monthly repayment amount or — if it will assist your cash flow — you can request a three-month ‘payment holiday’.

"Whilst these measures will increase your interest and total debt over the long term, they may allow you to keep your home. And, of course, it is likely that you will sell the property well before the term is up when there has been good capital growth. The bottom line is that one should make keeping up your bond repayments your number one priority, even if it means sacrificing luxuries for the time being.”

Wener says that those who do opt to downscale may well find a better selection of properties than there has been in years. ”Current market conditions provide good opportunities for shrewd investors,” she says. “Cash buyers are at an advantage again for the first time in many years, as the cash offer has a distinct advantage to the seller over an offer subject to a mortgage loan in the current climate.”

In Cape Town, the City Bowl area is a good case in point. It is currently possible to obtain a studio or bachelor apartment there for R650 000 whereas for the last few years prices under R750 000 were unheard of.

There are now many bargains to be found

There are now many bargains to be found in the central city. PGP is currently marketing a 65m² apartment that includes undercover parking, top-level security, a full-time concierge, access to a gym, swimming pool and ADSL in the sought-after Cartwright’s Corner development for just R895 000. Meanwhile in Sea Point PGP recently sold an 87m² two-bedroom apartment with an undercover parking bay between Main and Beach Roads for R770 000. A second two-bedroom flat with a garage sold for R840 000.

“High interest rates will not be with us forever,” says Wener ”and these are good examples of how savvy buyers can take advantage of the current market conditions, with an eye to long term capital growth.”

Wener points out that if one takes a long-term snapshot of the South African property market, it is clear that there has been at least 15 percent growth per annum in property prices over the past ten years, on a compounded average basis. “There is no reason to panic sell — the market will recover in the not-too-distant future. The medium- to long-term prospects of property investment are always excellent, with little risk. The sellers’ market has been with us for approximately eight years. Buyers should not miss the boat now that it has swung to a buyers’ market."

Tony Clarke, MD of Rawson Properties, agrees. “For some months,” said Clarke,”we saw buyers hanging back, waiting for sellers to drop their prices. For many that waiting period is now over. They are moving in again in the belief that the market is bottoming out and that, if they do not buy now, they may well find themselves paying more later on, because property prices are still increasing — albeit at a slower rate than before."