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The West Coast town of Vredenburg is booming and has in the past year notched up nearly twice as many property registrations as the combined figure for neighbouring Saldanha and Langebaan. This can largely be attributed to its central location. “It’s within 25 kilometres of seven other West Coast towns and has become the de facto shopping and business centre for residents of these towns while the residential property market is booming in support of the building industry and Mittal Steel’s operations. “The new West Coast Mall, expected to open its doors at the end of next year, will give a further boost to this trend and capture an even bigger slice of local buying power. Many large chain stores have signed up for retail space in the new centre and their presence will make it unnecessary for locals to travel the 140 kilometres to Cape Town for their monthly shopping.” The Pick ‘n Pay centre was upgraded recently and construction of the new mall starts in November. Homeowners should not panic and sell their properties if they are feeling the interest rate pinch. A rushed sale could result in a poor price and while that is great for a buyer looking for a bargain it is simply not good business for the seller. Homeowners have seen interest rates increase by four percent since mid-2006 and, understandably, household budgets have come under strain. This has tempted many to consider selling up quickly and moving to a cheaper property or rental accommodation. “There are pitfalls, however. If you sell your property in a hurry, you could actually realise less than its market value and possibly even less than the outstanding loan amount. “Secondly, property remains the best way of building wealth. Continuing to pay rent indefinitely, without any investment return, is clearly not wise.” On the other hand, he says, the intention may be to sell with the idea of biding your time until interest rates decrease again and theoretically make property more affordable. “The fallacy of this argument is that you will almost certainly not time the market correctly and when you do decide to buy again, prices are likely to have increased, offsetting any decrease in interest rates. “The banks are also not keen on you disposing of your property under financial duress and they would certainly wish to avoid repossessing the property. Accordingly, you will almost invariably find they make every effort to ensure you can remain the owner. “That could, for example, involve extending the life of your bond from 20 years to 25 or even 30 years, so reducing your monthly repayments although of course greatly increasing the ultimate cost of the property in the process. “But if, in spite of considering all your options, you still believe you have to sell, at least bring in an expert estate agent who will realise the best value for you.” Property is a worthwhile investment but for younger people hoping to buy it is difficult to take the first step. Difficult, but not impossible. While many young people acknowledge that property is an important investment, they are up against hurdles which include escalating housing prices, increases in interest rates and the National Credit Act, People usually have to wait a good few years into their working career before even starting to think of buying a property of their own, but there are a few ways of getting around this. Parents are a useful source, their accumulated wealth could work for you as leverage if they are prepared to act as guarantors for your bond. Banks are more willing to back first time buyers if they have some sort of guarantor and will be more favourable to negotiating better terms. But, be careful, if you default on your payments your guarantor will be responsible for your outstanding payments. For those who don’t have parents to rely on buying with friends is another option. Many younger people are also considering buying with friends, which is a good idea if you are unable to afford a bond on your own salary and an affordable way to get onto the property ladder. But ensure that you have a watertight contract when entering into this type of agreement. Ensuring that your credit is sound helps with securing a mortgage. Just because you are young it doesn’t mean that you shouldn’t be worrying about your credit rating. By demonstrating that you are a responsible spender, banks will be more amenable to lending you money. Don’t think that no one will notice if you haven’t paid that Truworths card or cell phone bill. While it is desirable to invest in property, it is not advisable to stretch yourself beyond your means. Make sure that you are emotionally committed to such a big decision, For at least the next few years, money will be tight and luxuries such as holidays and dinners out will fall away in lieu of bond repayments.” The worst situation you can get yourself into is having defaulted on your payments. If the property is repossessed it will take a very long time, if ever, to be able to buy another property, If, however, you are willing to commit yourself to a more restricted lifestyle for a few years, it will pay off greatly in the future.