Should you still be investing in property?

It’s still a good investment, but recent developments raise some concerns

THE COUNTRY’S economic climate and downgrade to junk status has many people concerned for their financial well-being, particularly those who hold major investments.

Prospective buyers are among those re-evaluating their positions because, although property professionals maintain “the best time to buy is when everyone else is afraid to”, there are genuine worries over the increased risks.

The pros and cons are simple, experts say: on the upside, the climate for buying will be optimum and there will be excellent opportunities to acquire quality rental units at good prices. Plus there will be increased demand for such units.

On the downside, however, repayments on properties bought with home loans may rise because of higher interest rates, and tenant rental defaults will increase as households come under increasing financial pressure.

While it is too early to tell what the real impact of the credit downgrades will be, there is no doubt that people have become more careful, especially at the top end of the property market, says Samuel Seeff,

Regardless of

Properties senior executive for developments in Cape Town, says as a medium- to long-term investment, Cape Town is unparalled in its capital returns.

“Cape Town has international status and investors are unrelenting in their quests to own property in the Cape,” she says. “The city retains its slot as the top-performing metro, recording an inflation rate of 14.3% in December; comfortably ahead of the other metros.

“The Western Cape is still the top-performing provincial property market with an 8.8% year-on-year inflation rate in March – considerably higher than the national rate of 4.2% for the same period.”

Tony Ketcher, Seeff ’s regional general manager in the Cape, suggests buyers intend to own a property for at least five years.

“This is important because even though there are sometimes opportunities to make a quick turn on a property, most property investments should be approached as long-term projects.”

Steve van Wyk, MD at Seeff Centurion, says it is important to remember that any economy and property market goes through cycles.

Investors should also spread their risk between shares and property. For true investment purposes, a property fund might make better sense than investing in bricks and mortar, but for ordinary buyers who need a roof over their head, he says property remains the best investment.

PICTURE: NEWSPORT MEDIA Cyclists ride above Hermanus during the FNB Wines2Whales race. Seeff chairman Samuel Seeff says almost anywhere in Cape Town, the Winelands and Hermanus are good investments.