Buyers and investors face conundrum as economic woes make choice critical
THE UNCERTAIN economic climate has prospective home buyers and investors queuing for advice on the best investment opportunities.
“The biggest question on buyers’ and investors’ minds today is what sort of property they should buy,” says Martin Schultheiss, chief executive of the Harcourts Africa property group.
“They weigh the benefits of older properties against those of units in new developments, urban against suburban units, and rural homes against units in golf estates. But the simple answer is that the situation changes all the time.
“For instance, at present there is no doubt the biggest growth in value is at the bottom end of the market due to the number of people migrating to a better lifestyle. But less than five years ago, golf estates yielded returns of 30 percent or more and investment in leisure was one of the best choices you could make.
“However, there is a golden rule in property investments that serious investors and keen home buyers should heed, namely, property returns don’t depend on when or what you buy or sell, but how long you are prepared to hold on to the property.”
Schultheiss says local investors became accustomed to making returns of up to 30 percent in the relatively short space of 18 months. Now that this figure has dropped significantly there has been much talk about property being a bad investment.
“However, we fir mly believe property remains a sound investment that will yield good returns for investors who are prepared to stay in the market over the medium-to longer-term, with the time that you remain in the market determining the returns you finally make,” he says.
“For instance, if you ask an elderly couple still living in their first home, they will probably tell you they bought the property for R25 000 – which was a huge sum in those days – but the current value is close to R1m.”