The record-low interest rates have already encouraged many first-time buyers to enter the market, and for good reason. At the current interest rate of just 7% (prime), and with room for another cut before the year is out, it is possible that the monthly repayments on a home loan will cost less than the rent on the same property, making it cheaper to buy than to rent.

At the current interest rate of 7%, repayments on a R1 million home loan taken over 20 years would amount to just R7,753 per month. In many suburbs, that works out to be less than one would expect to pay in rent on the same home. For example, tenants can expect to pay roughly R8,500 on a 1-bedroom apartment in Rondebosch East. These kinds of homes usually sell for between R850,000 – R1 million, making the monthly bond repayment more affordable than rent on these properties.  

“There are so many opportunities for first-time buyers across South Africa right now. Those who want to stretch their budget even further should look for new developments to avoid the expense of transfer duties and related fees,” Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, recommends.

For example, there is a new development in Sedgefield, 1 On Cisticola, marketed by RE/MAX Coastal, where buyers can purchase a one-bedroom unit for just R595,000 or a two-bedroom unit for just R895,000 – with no transfer costs/duties. The rental for a one-bedroom unit is estimated to be between R5000 to R5500/month (9.25 % yield), while the bond repayments on this home at the current interest rate would be just R4613. The two-bedroom units could rent for R7000 to R7500/month (9.00 % yield), while the bond repayments on this home at the current interest rate would be just R6939.

“For those who can afford to do so, there really has never been a better time to enter the market than right now. I would just advise buyers to leave room in their budget for if and when the interest rates return to pre-lockdown levels,” Goslett concludes.