Property is a good investment but make sure you can afford it
By Caroline Orange* – Given the current economic uncertainty and the budget speech delivered in parliament regarding the need to optimize spend, you might find yourself asking the question, is investing in property still viable.
The housing market has seen exponential growth over the past few years and as of late many anticipated the property bubble to burst. While property sales as a whole has slowed down and many sellers are taking longer to sell their properties, there is the age old saying that every home has an owner. It is most definitely a buyers’ market and this is obvious in the number of properties being offered under valuation.
Is it bargain hunting season? Possibly so, however it is important not to get caught up in the prospect of buying a bargain and end up overcommitting financially in a property you are not able to afford. When considering to purchase a property, it is vital to establish your liquidity capability to service the debt, important to factor in your decision making is if the interest rates go up would you still be able to afford the property. If your liquidity is strapped a 0.5% increase on your current interest rate can lead to unnecessary strain on your overall wellbeing.
Another component you need to factor into your decision making is how much work is required to the home you wish to purchase. Here I am not referring to a fresh coat of paint, but more so updating bathrooms and kitchen. These are expensive refurbishments and can definitely derail your finances if not budgeted for carefully from the beginning. So what does this mean, when buying your new home, make sure it does not become a nightmare of expenses you are not able to sustain as pipes burst and cupboards fall apart. Be clear that if there are items in the new home you wish to purchase that do require longer term updates, you are able to set money aside to fund those.
Property will always remain a viable investment all that is required is careful consideration whether you can afford it now and later.
* Caroline Orange is the Home Loans Sales Manager at Standard Bank Namibia