A slowdown in the economy usually affects the housing market at some point, making it easier for some buyers to buy a home as price growth slows. But does this mean that everyone who has a steady job and income should rush out and invest in bricks and mortar? Some experts will undoubtedly be saying ‘yes’, however there are right and wrong reasons to buy and those considering investing in property should, well…consider.
Property is not a short-term investment and those who believe they are going to make a handsome profit after a year or so, need to re-evaluate their buying decision. This applies to those who are considering job hunting in other provinces or those who are looking for other work opportunities. Buying a home ties you down and can limit your job choices purely because of the location of the property.
Although most are aware of the need to save for a deposit, not everyone understands that the ‘buck doesn't stop there”. Buying a home is an expensive exercise and includes all sorts of hidden costs including transfer fees and conveyancing costs. Cheaper fixer-uppers often come with their own set of challenges in the form of maintenance costs and yes, you may have bought the home for an absolute song, you are going to have to spend money in order to make the place habitable.
Banks are governed by the National Credit Act, which prohibits them from advancing too much money. Of course this is annoying when you've found the perfect house that you know you can afford, but the bank won't grant the bond or demand a much higher deposit before they’ll lend you anything. There are numerous ways to secure the cash needed for a deposit, you can borrow from friends or family or you can sell a second car and make do with one (telling yourself that it's a luxury to own two vehicles). In the first instance the money has to be repaid, which is often easier than it looks once reality hits. Likewise, making sacrifices by restricting yourself to a single mode of transportation is probably going to come back to bite, eventually turning what should be an exciting time in your life into something of a bit of a grind.
We are not suggesting for a moment that people should stop investing in property, but what we are recommending is that those who decide that it's time to own their own homes do so for all the right reasons, including making sure that they are truly financially able to afford a property.
Investing in property is a serious business and should never be entered into with the idea that the home can be sold if the financial strain becomes too much. As we've stated before, it's not a short-term investment and you stand a real chance of losing a substantial amount if you sell too soon.
Author: Lea Jacobs