The Property Market: Why Now is the Best Time to Invest
Category Just Imagine Properties Team
You might have heard the saying "calm seas make for poor sailors"; well, it's probably safe to say that many of us got our sea legs in 2019, marked as it was by economic and political instability, and, when 2020 rolled around and more or less the entire world was brought to a complete standstill by the COVID-19 outbreak, we became veritable ships' captains (or first mates at the very least).
While the storm may have somewhat subsided, most people are still cautious - and even tending towards the pessimistic - when it comes to making long-term investments against the backdrop of these very uncertain and unprecedented times.
And yet, the current state of the property market provides plenty of reasons for investors and buyers to be positive.
For one thing, successive interest rate cuts in the first half of the year have brought the prime lending rate to the lowest it's been since 1973, which means that bond repayments will drop significantly and it will also be easier for homebuyers to secure financing in addition to enjoying more favourable interest rates. These factors will be welcome news for anyone looking to buy a property.
However, not everyone is aiming for homeownership, with a large percentage of millennials still opting for renting property rather than buying. This makes this the most opportune time for investors to purchase property with the intent of leasing it out to a growing rental market.
Terms that may be familiar albeit not completely clear to you are "buyers' and "sellers' markets". Simply put, a buyers' market represents property market conditions in which there is an oversupply of houses with less people looking to buy or invest, whereas a sellers' market is the inverse. Currently, the former is the case, and an uptick in properties for sales has brought down property prices.
According to Just Imagine Properties principal, Theo Erasmus, there has never been a better time to invest in property.
"These are the most favourable property market conditions we are likely to see in a while," says Erasmus, "with the combination of record-low interest rates, a rising number of renters and, of course, the buyers' market that's forecast to last for the remainder of 2020 creating the best possible environment for investors".
He goes on to say that the country's macro-environment has seen some significant changes in the last couple of months due to the ongoing pandemic, and a severely depressed economy was inevitable, but these conditions have had some surprising and unforeseen benefits for the property market.
"We were all forced to adapt to what many are calling the 'new normal', but we are optimistic that we can weather the storm and help investors get the best returns".
As an investment pro-tip, Erasmus adds that, because the cost of construction and civils have increased over the years, it is much more desirable for buyers to invest in an established property where money can rather be spent on renovations, than opting for a new development since labour and materials costs are higher than in the past.
"You are likely to pay less for a house that has already been built, and the price gap between new and established properties makes this an attractive option for first-time investors", Erasmus concludes.
Author: Charl Mijnhardt
