Ricochet News

Tips for deciding how much home to buy

Jul 7, 2017
Tips for deciding how much home to buy

Our lives change all the time, and what works for us today may not work tomorrow, which is why most people expect to move house several times in their life, from a modest flat or townhouse when they are starting out, to a second, third and even fourth home in the suburbs as their family – and status – grows, and then again to a smaller home or a cottage in a retirement village.

However, moving is not only disruptive but expensive, especially when one considers transfer duties, legal fees, bond registration fees and estate agent’s commissions on top of the purchase price of a new house.

“And with property prices growing only very slowly at the moment, it is taking longer for the value of homes to increase enough to cover those upfront costs and enable home sellers to come out ahead,” says Gerhard Kotzé, MD of the RealNet estate agency group.

“Consequently, existing home owners are increasingly looking for ways to avoid or at least delay moving. In addition, first-time buying is often being delayed now until people are in their mid-30s - and more and more, these buyers are hoping that with some forethought and a little luck they may actually never have to move again until they retire.

“It is important to remember, though, that buying too much house at the outset can be wasteful in terms of rates and utility costs, as well as the time and cost involved in the additional maintenance and gardening that will be required. The trick is to find the right balance between having enough space for a growing family, but not so much that the property becomes a financial albatross.”

And to do that, he says, prospective buyers need to ask the “right questions” before they go househunting, including the following:

*How much can we comfortably afford to pay for a property? The figures that you come up with may be very different from the home loan amount that a bank has quoted you – because in addition to your monthly bond repayment, you need to make provision for your current living expenses and property maintenance costs, as well as savings for retirement and other goals.

*What must we realistically plan for? Will we need bedrooms and bathrooms for children/ more children in the future? Is it likely that we will need a guest suite or granny flat to accommodate one or both sets of parents as they age? Should we anticipate a need for a home office or workshop to accommodate a home-based business? Will we need space for entertaining? What size garden will suit our lifestyle?