2020 - the time to buy property
Category News
1973 was the year in which David Bowie, Paul McCartney and Elton John were topping the charts. If you are turning 47 during 2020, then it was also the year of your birth. It was also the last time that a repo rate as low as 3.75% was seen in South Africa.
When South Africans rang in the start of 2020, we had no knowledge of the huge changes that the year was going to bring our way, largely as a result of the outbreak of COVID-19. With particular reference to the property market, we had no idea that the repo rate would be slashed, with four cuts being announced in the first five months of 2020 - with cuts coming in January, March, April and May. In addition, we had no inkling of just how perfectly various factors were going to align to make this year the perfect opportunity to step up on the property ladder or make further investments in the property market.
Repo rate and interest rate slashed
The first repo rate cut came on 16 January, when 25 basis points were trimmed off, bringing the repo rate to 6.25%. The next cut came soon after the announcement of the COVID-19 lockdown, bringing much-needed relief to cash-strapped home owners by cutting the rate from 6.25% to 5.25%. The following announcement came on 14 April, when another 100 basis points were sliced off, bringing the repo rate down to 4.25%. The repo rate made headlines again just over a month later, when another 50 basis points were shaved off on 21 May, bringing the repo rate to a mind-boggling 3.75%. While the repo rate is not the rate at which the banks will lend money to would-be property owners, the prime interest rate climbs and falls in accordance with the repo rate, and as a result of the lowered repo rate, the prime interest rate is currently at a very favourable 7.25%.
To put this into perspective with the help of the repayment calculator on the Jawitz Properties website, if you bought a property for R1 000 000 in late 2019, paying no deposit and acquiring a linked home loan at the-then prime interest rate of 10.25%, your monthly bond repayment would be approximately R9816.43. At the current prime lending rate of 7.25%, your monthly payment on the same loan will amount to approximately R7 903.76. - which means your home is costing you a massive R1912.67 less every month.
More properties than ever before transfer-duty free
If unheard-of interest rates weren't enough incentive to think seriously about making 2020 the year that you buy property, the other huge advantage for would-be property buyers is that if you are buying a property with a price tag lower than R1 000 000, you will not be required to pay transfer duties. The transfer-duty-free threshold was raised from R900 000 to R1 000 000 by Finance Minister Tito Mboweni as part of his budget speech made in February 2020. According to Ooba's Transfer Cost Calculator, this means that, when purchasing your R1 000 000 property, you save approximately R24 660 that you would previously have had to spend on transfer duties and related costs.
A browse through the properties for sale on the Jawitz Properties website shows that the property market in South Africa is currently very favourable for buyers, and those choosing to take advantage of all the positive factors which have aligned in 2020 are spoilt for choice.
The team from Jawitz Properties is here to help you take advantage of this unprecedented opportunity. Contact us for more information.
Author: Jawitz Properties
