Please help me decide

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SaoirseB

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I've been struggling to decide what to do for the last couple of months.

I keep reading conflicting articles about the interest rate and the future of the property market. Some forecasts are bad and some are good which is partly why I keep swinging back and forth.

So I have a bond which I'm still paying off. If I do not take out another bond and stick to my budget I should finish paying it off in August 2016.

I'm currently renting a house and the rental includes all the municipal charges except electricity.

There's a property that I'm eyeing, but it needs a bit of work. The bond payments would be roughly equal to my current rent, but then I still have to pay levies, rates + electricity. And whatever cash I was going to pump into my current bond would go towards fixing up the place which means I won't be able to pay off my current bond as fast as I wish.

I keep swinging between
1. waiting to see how the property market goes and paying off my current bond and hopefully get a better deal later
2. or buying now, but take longer to pay off my current bond. I'm also worried better deals might come out later if the market goes down.

Any property experts here? Do you think the market will drop a little? I know it sounds horrible, but if it does, prices will drop right? And there will be more repossessions right?
 
I'm no expert, I say go with your gut...
Look, you can always wait around for a better deal, which might never happen, then you will really kick yourself for missing one that was right in front of you all the time.

It's like waiting all your life for the perfect woman, you can't wait forever...or hope that something better will come along...you know the rest...
 
Property has historically been a good investment but it requires a stable economy and society.
In my opinion the main risk with property is it's not a very liquid investment so if something really bad happens in a short time frame, you may not be able to get the property sold at a good price or even sold at all.
Land invasions, seizure of private property, civil unrest/war and economic collapse are just some of the scenarios that come to mind.
 
Its really depends on what you intend to do with the second property and what you are using the first property for.

There are some financial advisors who suggest that property is not a great investment at all, especially when considered next to equities or even listed property. The returns are just not that great when considering all the other charges like rates and taxes, interest, levies (if applicable).
 
It's really tough to say what's going to happen in the property market which is why you're seeing conflicting views on the market.

The forecast for interest rates over the short term (6 to 12 months) is flat, with a slight chance of either an increase or decrease towards the end of the year. A decrease will happen if SARB believe it would help stimulate the economy and there is no chance of inflation leaving the 3% to 6% band. An increase will happen if inflation tests the upper 6% limit.

The forecast for interest rates over the medium term (1 to 4 years) is upwards. We are at the bottom of a cycle. Rate hikes are coming, just nobody knows when.

Over the longer term, it's anyone's guess.

Property prices took a big knock with the global financial crisis and have largely recovered from that knock. I'd say that prices now are fair, and we can expect small to moderate growth in property values over the medium term, barring a major upset in global or local financial markets.

I generally advise that it is better to own the property you stay in than to rent. This is not for everyone though and depends on a number of personal factors.

You mention that you won't be able to pay your current place off as fast as you'd like if you buy another place as it needs fixing up. That's fine. Your bond is the cheapest debt you'll find and it can sometimes make sense to pay off your bond over the maximum term while investing any surplus into equities or other vehicles that have a high likelihood of outperforming your bond rate, especially in a low interest rate environment.
 
I'm renting out my current property and will live in the next one if I buy.

I had a look at that site Gnarls thanks. I appreciate all the advice from everyone and your indepth thoughts Eskimo. Clearly I have a lot to think about, but I'm coming to the conclusion I should buy. Like you said, it's better to pay towards my own bond.
 
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