Although South Africa has entered an era of uncertainty around property, investors are still buying.
Proposed amendments to Section 25 of the constitution have hit front pages more often than any other news, but this has not stopped people entering the market, say Minette du Plessis of Just Property’s Investment division.
“Have we seen a decline in sales? Not a chance. Considering who we now know will be impacted by the new property bill, and how President Cyril Ramaphosa says it will be constructed, we believe the way redistribution will play out will, in fact, boost the economy and growth.”
Du Plessis says some of the hottest areas for property investment in South Africa include:
Sandton, where apartments priced from R1.3million have shown “phenomenal” peaks in sales.
Lephalale, which has seen growth in sales of properties under R1.3m, thanks to the area offering corporate letting and a specific product for this market.
Cape Town properties under R1m, which have been selling out in less than a day, and most purchasers are cash buyers.
Du Plessis says properties in the R800000 to R900000 band, with a monthly rental income of R7500, attract investors all over the country, as well as South Africans working abroad.
“The banks are being generous to South Africans working overseas. Absa is offering them up to 95% bonds. In fact, all banks are offering great deals in general for 2018.”
Her response to the question about why investors should invest in property in South Africa: “You can still buy property for under the R1m mark, and this is the most active market at the moment. The risks are lower and the rental market is strongest for such properties. This type of investment is still very attractive and promises better potential growth than any vehicle currently offered by a financial institution.”
Even in tough times of high interest rates or unpredictable political seasons, Du Plessis says investors will still make their annual 8% to 10% capital and rental growth, if they bought in a busy hub with public transport, schools and malls in close proximity.
“If you look back to when your family and friends bought their homes or investments 35 years ago, you will see that property sold for R30000 then is now worth at least R1.5m, or even more.
"Property is a long-term investment, and as such, this historical and ongoing growth will continue beyond our time. Sectors of the population may be uncertain about the future, but we are confident.”
She says uncertainty plays right into the hands of buyers who get into the market now.