If you desire financial freedom the first step there is home ownership through a well defined financing option if you are a first time buyer.
The key to this is Home Equity – Home Equity is the difference between the home’s current market value (the price at which the house could be sold) and the outstanding balance on the home loan..
For example – Let’s say you have a balance of R100,000 left on your home loan, but the property is valued at R450,000. You have R350,000 worth of home equity!
Historically house prices increased by 11.25% annually from 1966 to 2012. (Source: ABSA Annual Average House Price Index)
This is the historic performance of house prices but what about the future. No one can determine exactly what future house price growth will be, but significant supply and demand factors indicate that prices are likely to grow at least at the rate of inflation, currently targeted at between 3% and 6%.
One significant factor that drives up the demand and cost of products and goods is urbanisation. This occurs when people move from rural areas into cities, often motivated by economic factors such as better job opportunities.
As cities develop, effects can include a dramatic increase and change in costs of goods. (Source: Wikipedia The Free Encyclopedia) Since land in our larger cities is increasingly scarce, the sooner you become a homeowner, the sooner you are likely to benefit and create wealth.
Apart from the privacy and security a home provides allowing children to study without distraction, the children of homeowners perform better at school and are more likely to continue studies after school to get a tertiary qualification.
Children from families who own their own homes perform far better at school and are more socially balanced. (Source: Habitat for humanity)