MOVE to invest in property

Category Investing

Property investment in South Africa has proven, over time, to be a popular asset class that generally performs well against inflation, providing investors with a sound way to grow wealth over the long-term.

The Gauteng Property Market
Commenting on property investments in Gauteng, MSP’s Operational Director David Britz says: “The Gauteng market is abuzz with emerging homeowners who are now able to afford entering the buyer’s market for the first time. This vibrant market reflects the needs of the developing labour market and involves properties in new developments selling for around R600 000.”

Affordable homes
MSP in Gauteng focuses strongly on this market, moving families into properties of between R500 000 and R800 000. David continues: “The first time buyer’s market doesn’t focus on investment properties per se, but more on enabling these buyers to become home owners of the house in which they choose to live. We develop new homes in Azaadville Gardens in Randfontein and Crystal Park on the East Rand. We have three new developments in Pretoria. Glenway Estate is towards the East of Pretoria, while The Orchards is in Pretoria North and Kirkney Village in the West.”

FNB’s Property Barometer for the Gauteng Sub-region, issued in May 2017, reports that property prices in this region shows that “mediocrity in terms of house price performance” is widespread. This is in stark comparison to the strong property market in Cape Town. The report affirms David’s notion that the mediocre market makes it easier for first time buyers to enter the market.

The report cites that, in the first quarter of 2017, the City of Tshwane’s estimated average rate of the growth in house prices was 4.21%, a marginal improvement on Ekurhuleni’s 3.92% and Johannesburg’s 3.41% year-on-year. These returns may not excite property investors, however, it does make property more affordable to the average person who is making the decision between renting and buying a home in which to live.

Continues David: “The level repo rate of 7% and indications that the South African Reserve Bank’s Monetary Committee may keep it at this level in the foreseeable future, also help stimulate the first time home buyer’s market in Gauteng. In times of escalating interest rates, first-time homebuyers especially are cautious of committing to investments which may become unaffordable when interest rates rise.”

High net worth investors
David continues: “One must, however, not lose sight of the fact that Gauteng remains the country’s economic heartland. While the demand is higher from first time homebuyers in the province, around 50% of the country’s high net worth individuals still reside in Gauteng, resulting in property in the upper affluent market also still changes hands at significant prices. These individuals also often look further than the province in which they reside when deciding to purchase investment properties.”

Western Cape’s investor market
The semigration trend, which has seen affluent people and middle-income South Africans move to the Western Cape, started around mid-2013. This trend has seen a significant number of homebuyers relocating, further stimulating the property market in this province.

FNB’s Property Barometer indicates the average growth in house prices for the City of Cape Town is at 14.1% year-on-year for the first quarter of 2017.  The Atlantic Seaboard and City Bowl remains the areas where property prices are most inflated, making these sought-after areas off the cards for first time homebuyers. “However,” comments David, “there are numerous other areas which are doing exceptionally good in the greater Cape Town area. These properties may very well be priced within first-time homebuyers’ budgets. These better value properties also offer solid returns to investors who buy to rent.

“Property price growth of 10,1% has been achieved in Cape Town’s Northern Suburbs (Durbanville, Kraaifontein and Brackenfell) in the first quarter of 2017. This goes to show that first time buyers or investors with limited budgets can still find affordable property that offers good returns in the greater Cape Town area. MSP’s developments such as Buh-Rein and Acorn Creek Lifestyle Estate are proof of this, offering sound return on investments and affordability. In fact, Cape Town’s Somerset West, Strand and Gordon’s Bay region has pushed past the Southern Suburbs into the fifth position in FNB’s recently released Property Barometer report,” adds David.  

Whether you are looking for an affordable home to live in Gauteng, or an investment proposition within the greater Cape Town area, MSP can help you make the right property MOVE. Get in touch with us for more information.


Author: Multi Spectrum Property

Submitted 13 Jul 17 / Views 2659