COVID-19 has effectively brought the world to a standstill. Amidst the pandemic, opportunities are also arising. The property market is a perfect example – seemingly in stasis while South Africa eases out of lockdown, but growing increasingly attractive for investors all the while.
Brad Morgan, of Rawson Developers, has detailed this phenomenon.
Purchasing power at an all time high:
Morgan says those lucky enough to retain stable employment will find their money going further than ever on the property market these days.
“The prime interest rate has already dropped 2.75% since January and we’re expecting further cuts to happen later this year,” he says. “As a result, bond applicants are qualifying for up to 20% more on their bonds than just a few months ago, based on the same income and expenses.”
Increasingly affordable bond repayments:
Monthly bond repayments have also become much more affordable thanks to interest rate cuts. The monthly repayments on a 20-year loan for R1 million at the prime lending rate have fallen from R9 650.22 at the beginning of January to just R7904.00 as of late May. Interest rates are almost at a 5o year low.
This, Morgan says, will not only help existing investors break even on their rental properties that much sooner, it’ll also open up the market to tenants looking to transition to owning a home of their own.
Ideal timing in the property cycle:
Whether buying for the first time or adding to an existing portfolio, Morgan says the timing couldn’t be better when it comes to the property cycle.
“Buying now means getting in at the trough of the cycle, which positions investors for maximum capital growth over the course of the next upswing,” says Morgan.
Incredible deals on offer:
Private sales aren’t the only bargains on offer at present. Morgan says even developers are putting together extraordinary deals for buyers during these difficult times.
One particular special by Rawson Developers has micro apartments, studios and one-bedroomed apartments at Newlands Peak in Newlands which will be discounted on launch by up to R 200 000.
While growth is certainly the end goal for any investment, the looming global recession is also making stability hugely important. Cash investments are notoriously volatile, fluctuating dramatically based on market trends and sentiment. Property, on the other hand, offers far greater long- and short-term stability based on historical performance.
“This stability can be a very valuable asset to investors looking to minimise or balance the risk to their portfolio,” says Morgan. “The phrase ‘safe as houses’ exists for a reason – barring a few very specific instances, property has always been a sought-after safe haven for investors during financial crises.”
Picture: Facebook/Rawson Developers