Interest Rates

5 Reasons You Should Invest in Residential Property in South Africa Now

By 26/11/2020 November 29th, 2020 No Comments

SOUTH AFRICA’S PROPERTY MARKET HAS A BRIGHT FUTURE, BE A PART OF IT

The best thing about hitting rock bottom is that you cannot go any lower. The only way to go is up! South Africa has experienced some lows recently, including COVID-19 and the national lockdown, low GDP growth, high unemployment, and the resulting pressure on household finances. But it’s not all doom and gloom.

Here are five reasons why you should be investing in residential property in South Africa right now.

  1. THE ABILITY TO USE LEVERAGE (OTHER PEOPLE’S MONEY)

Robert Kiyosaki said, “In the broad definition, the word leverage simply means the ability to do more with less.”  What makes property an exceptional investment is that you can acquire property investments with very little of your own funds.

The banks are currently granting more affordable and easier access to home loans, which makes property an increasingly attractive investment option.

  1. LOW INTEREST RATES

In our previous article, To Fix or Not to Fix your Interest Rate, That is the Question, we saw how interest rates have a significant impact on your property investment portfolio. They are currently at a 50-year low, which means you will pay less servicing debt and enjoy better cash flow and returns. This creates a tremendous opportunity for investors.

  1. LOW RISK & LOW VOLATILITY

Property in South Africa has grown consistently over the last 50 years. Property tends to keep its value very well compared to most other investments. This means that the risk and volatility of property investments are very low. Sometimes it grows faster and sometimes slower, but property prices have continued to grow. Rental income has also shown very consistent escalations.

  1. HEALTHY CAPITAL GROWTH

The problem with so many investors’ strategies is that they are obsessed with quarterly earnings (short-term performance). Whereas, if you follow Warren Buffet’s approach to investing, for example, he is not interested in what is going to happen in the next quarter, year or even two years. He looks at the next 10 or 20 years and so should we when it gets to property investment.

  1. ACQUIRING PROPERTY AT DISCOUNTS

I’ve always loved Warren Buffet’s approach to investments. One of his sayings has stuck with me: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

We can apply this to property investment as well.  In one of our previous articles,  Here’s Why I Am Buying As Many Properties As I Can (While Others Are Selling), we discuss the uncertainty and fear in South Africa and the world and how this is creating opportunities to purchase properties from panicked sellers who have no regard for the intrinsic value and long-term economic worth of the properties they are selling.

 

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