According to data recently released by FNB, the average age of a South African home buyer has increased from 38 to 44 this year. In an attempt to help first-time buyers enter the market sooner, Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa, walks us through the steps of saving for your first home.
“If you take a realistic look at the property market, you will discover that you will need a minimum of R100 000 to use as a deposit and to cover the transfer costs and various other expenses on an entry-level property.
“As it stands, in order to reach the targeted amount in five years, a buyer will need to save as much as R1700 a month. If you want to do it in four years, you’ll need to save R2100 a month; in three years you’ll be saving R2800 a month; in two years it will be R4200 a month; and in one year you’ll have put aside a whopping R8300 a month.
“However, for the most of us, even finding just R1700 a month will take some doing.”
Find a financial institution that can help you reach your savings goals. It is better to put your monthly contribution into a tax-free short-term investment that yields higher returns than a normal savings account at your bank. Chat to your financial adviser.
Cut back on unnecessary expenses. Pay off your clothing and other store accounts and close them as soon as possible. According to the 2014-15 World Bank Report, credit facilities make up 65% of credit usage in South Africa.
Take up a part-time job to earn extra cash to put into savings. There are various part-time jobs a person can do to earn a little extra cash that won’t take up too much spare time. Tutoring pays roughly R200 for just two hours a week, freelance writing at the industry standard R2 a word pays R1000 for a 500-word article, babysitting and weekend promotional work usually pays around R150 an hour.
“Admittedly, none of these steps offer a simple solution, but not all things in life can run at the speed of a social media feed. By the end of the five-year saving period, you will be able to afford a lifelong asset that will offer financial security well into your retirement,” Goslett says.