COVID-19: The pros and cons of buying property during tough economic times

Buying property is never a decision to be taken lightly. You have to ensure that you get a good deal and make a good financial decision. 

We spoke to Real Estate Agent Jabulile Lefu of JL Properties to answer the most common property questions, especially concerning buying during tough economic times. 

With the current financial state the country is in, what are the pros and cons of buying property now?

Pros: It is a buyers’ market due to low-interest rates, and according to home loan consultants this is set to continue for at least 18-months. It is now cheaper to buy than to rent.

Cons:  Uncertainty of employment for some buyers, but apart from that it a good time to buy.

What should potential property buyers look out for before buying?

Buyers should do thorough research before buying, the following should be considered:

1. Affordability, do your homework and check how much you qualify for 

2. Save money for attorney fees

3. Know if you have to pay for levies and home owners cover

4. Location, location, location  - investigate the area.

It is said that buying property is a good investment. Is this always the case, or are there things that can cause your property to lose value and you find yourself having to sell at a loss?

Buyers should always investigate the area, if it is an area that is in decline then you should possibly not invest there to avoid selling at a loss. 

Is it advisable to buy property on a fixed interest rate term?

No, even though your monthly repayment stays the same throughout the agreed term the fixed rate will revert or be reviewed once the term ends, which is sometimes after 1 -2 years. The reviewed rate is always higher. I would advise buyers to speak to consultants based on their finances.

For those who own property and looking to sell, is this the right time to do so?

Depends on the owner's situation, some are forced to sell due to their financial constraints, others immigration, and of course others just want to up-size or down-size, so it depends on the individual. But generally being a buyers market means that there are a lot of buyers looking to buy, which is good for sellers.

Lastly, COVID-19 has led to people losing their jobs and being unable to pay their bonds. What are the options available to them to ensure they don’t lose their property because of financial constraints?

Owners have to first speak to their banks if financially constrained due to the pandemic, they have to get into a payment holiday program with their banks, to offer temporary relief on repayments and if their situation does not pick up, they would have to let their banks know so that they can get into a distressed property sale option, giving the seller an option to sell the property through an agency before they lose it.

Image courtesy of iStock/ @Jeff Manes