R1m home loan costs only R7800/month right now – what are you paying to rent?
At the start of 2020 – with the prime lending rate at 10% - on a 20-year mortgage, your monthly repayment per R1 million borrowed was about R9700.
Today – with the prime interest rate at 7% - your monthly repayment falls to R7800.
There’s a glut of properties on the market - should you take advantage?
Pieter Koekemoer (Head of Personal Investments at Coronation Fund Managers) warns against getting carried away.
Transaction costs are high (transfer duties and bond registration fees can total between 5% and 12%) while agent’s commissions can push up to 7.5%.
In other words, you need a lot of capital growth to just break even – property remains a long-term purchase.
Refilwe Moloto interviewed Koekemoer.
In August, house prices have actually gone up a little [year-on-year]. Not by much - 1.4% - but the low interest rates are underpinning the market.Pieter Koekemoer, Head of Personal Investments - Coronation Fund Managers
Working from home… is a strong incentive to upgrade, finding a bit more space…Pieter Koekemoer, Head of Personal Investments - Coronation Fund Managers
If you’re employed – if you have a reliable source of income… you can pay a bit more for property… the market has held up.Pieter Koekemoer, Head of Personal Investments - Coronation Fund Managers
Commercial property… is the epicentre of the crisis. We see much larger declines in value than in the residential market… If you’re very brave, it may be a buying opportunity… On average for the index, the one-year forward expected yield is around 14% - that’s very attractive! …Pieter Koekemoer, Head of Personal Investments - Coronation Fund Managers
Listen to the interview in the audio below.
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