“It is definitely the right time to invest in property. The weak Rand aside, we have since 2007/8 been operating under down-market conditions that are heavily weighted in favour of buyers,” says Seeff Properties Chairman Samuel Seeff.
He adds that price growth has been flat for years, which is an advantage for buyers. “House price growth has been flat, on average just beating inflation, while the interest rate is at a four-decade low. This means that property and mortgage finance is the most affordable in decades.”
But Seeff cautions prospective buyers and investors to do their homework before making a purchase and negotiate to pay fair market value.
“Buying a property is the single biggest – and most expensive – purchase a buyer will ever make. It is not like buying the wrong pair of shoes; you cannot just take it back to the store and exchange it for something else. You can’t just sell if you’ve made a bad investment— it is not that easy, especially if you hope to make a profit on it,” he says.
Chairman of Lew Geffen Sotheby’s International Realty, Lew Geffen agrees. “There is no better time than now to buy property, as it will be more expensive in the next two years,” he said. He also predicts that the property market will maintain an average 8 to 9 % growth over the next five years.
“Buy low and sell high is always the golden rule when it comes to making money out of property. Buy low, meaning get the property for the best price, and sell high, meaning that you sell it for the best possible price,” Geffen says.
Secondly, timing is very important. “Knowing when to buy and sell is commonly referred to as ‘timing the market’, a concept that is difficult to predict and you can only really look back and say with certainty that a particular time is a good time buy,” he said.
Head of Absa Private Asset Management Craig Pheiffer says buying residential property, as an investment, is both tricky and risky, but if done right, one can make huge profits.
“Rising interest rates and a bad economic environment generally hurt the bond market,” says Pheiffer. “But one always needs to look at the less risky option when it comes to buying property. For example, by investing in listed property, you could diversify the risk across a whole range of stocks in the sector.” These include retail, industrial and commercial property in various geographic areas.
HOLD OFF ON SELLING
Pheiffer says there’s a softer demand in rising inflation and while there’s no hard and fast rule when the cost of housing goes up, now is generally not a good time to sell property.
“But if a node or suburb has a high demand, then there will be people either looking to rent or buy a property.
“However, it may have been better to sell a house a couple of months ago when the interest rate was expected to remain low. But in the current cycle, I would say property owners should look at putting their property in the market in the next three to five years when this cycle is over.”
And if you have buyer’s regret? “If the property is not a good investment, it’s better to get out of it instead of paying high costs with more money going out than coming in,” Pheiffer says, adding buyers must study what’s happening in that area’s residential property market by speaking to real estate agents operating in the area, before making an offer or selling.
Additional reporting: Buhle Ndweni