Buying a home needs proper financial planning

Good news for property owners but it means digging deeper into your pockets for those who want to acquire property.

While taking a step towards buying your first home can be exciting, it needs proper financial planning.

Data collected by BetterBonds showed that average home prices were higher in January compared to the same period in 2024 and the last quarter of that year.

Good news for property owners but it means digging deeper into your pockets for those who want to acquire property.

“The average home purchase price in January of R1.58m was nevertheless unchanged from the average price recorded during Q4 2024. It was 4.1% higher than in January 2024, which embodies a real increase of more than 1% (after adjustment for inflation),” reads a report released by Better Bonds recently.

“First-time homebuyers have experienced a steeper increase in average home prices, with the average price of R1.34m in January, 7.3% higher than a year earlier and 4.3% higher than the average for Q4 2024.”

The report notes that after an interest rate cut announced in January, its impact on average home prices would be determined in February and March.

Last month, ooba Group CEO Rhys Dyer noted that since the first interest rate cut in September 2024, the market had “responded swiftly” to it in just a month.

ooba Home Loans reported year-on-year and month-on-month volume increases of 16% and 27%, respectively.

“Spurred on by factors such as additional interest rate cuts, better economic prospects, improved affordability and more stability, we believe that demand for property in 2025 will reach levels exceeding those seen in recent years, noted Dyer.

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa says your first home is more than just a place to live.

“It’s a stepping stone to building long-term financial security. Choosing the right property in the right location can help you build equity faster, making it easier to move up the property ladder over time. A well-planned first purchase sets the foundation for future real estate success,” he says.

Now, pause and look at your finances. Have you saved up at least 10% for the deposit? This will help decrease your monthly repayment on the bond.

Have you calculated how much you will need for transfer and conveyancer fees? These usually run into tens of thousands. For example, if you’re looking to buy a R1m house, your 10% deposit will be R100,000.

Goslett says first-time homebuyers need to be better equipped to make informed decisions. “Never underestimate the importance of making a good first purchase – if you are ever feeling unsure, speak to a trusted real estate professional for some free advice.”

RE/MAX of Southern Africa gives tips on how to avoid common mistakes:

You need more savings than you might think

While saving for a down payment is crucial, it’s equally important to budget for all the additional costs that come with purchasing a home. These include the various closing fees such as the transfer duty and bond origination fee, as well as the moving expenses and possible maintenance or renovation costs to make the home more your own.

You can get pre-approval for home financing

Many first-time buyers don’t realise that they can receive pre-approval on their home financing so that they know upfront how much they can actually afford. There is no cost involved to do this – simply visit a bond originator and fill in some paperwork to get started. Not only will this help you budget more accurately, but it also shows sellers that you are a serious buyer, which can give you extra leverage if there are multiple offers on a home.

Don’t underestimate the cost (and work) on a fixer-upper

Purchasing a home in need of renovation offers first-time buyers a much more affordable way to enter the property market. However, it’s essential to assess the scope of repairs, budget for renovations, obtain necessary permits and plan for accommodations during the remodelling phase. With thorough preparation, transforming a fixer-upper can be one of the best ways to climb the property ladder faster.

Your credit score is more important than you realise

Your credit score influences your home loan approval and the interest rates offered by banks. A higher score enhances your chances of securing favourable loan terms. Even just a 0.25% improvement on the rate the bank is willing to offer you can add up to hundreds of thousands of rand over the loan term. If your credit score is low, consider taking steps to improve it before applying for a mortgage.

A good real estate agent is worth their weight in gold

A seasoned real estate agent offers invaluable expertise, from identifying suitable properties to negotiating favourable terms. They can demystify industry jargon, advocate on your behalf and recommend trusted professionals for related services like mortgage lending and moving. Their guidance can make the home-buying experience smoother and more efficient.