A perfect window of opportunity

First quarter bodes well for investors who can afford to get on property ladder

SOUTH African consumer confidence is on the rise, and for those who have been playing the “wait and see” game, experts say now is a good time to buy property.

While tax increases announced in the Budget speech will no doubt make it more difficult for potential buyers to afford bond repayments, experts say there is a window of opportunity available right now to buy before any possible positive effects are fully felt by the economy that could result in better returns on property investments.

And so, the traditionally popular first quarter of the year – known for its increased activity in the property market – is boding well for those who can afford to get on the property ladder.

Added to an improved consumer confidence, Jacques du Toit, senior property economist at Absa Home Loans, says the fact that any property up to R900 000 is still exempt from transfer duties is good news for today’s buyers, while the low CPI and the strong rand will increase the possibility of lower interest rates.

He says this all can have a positive effect on the property market in the long run.

Over the past year, banks have also been willing to do business, offering great finance deals, says Rowan Alexander, director of the Alexander Swart Property Group.

“These are exciting times for the property market as consumer confidence is on the rise… The property eco-system is healthy and thus it is a good time to be investing.”

The increased activity in the market that is usually seen at the beginning of the year can be mostly attributed to the financial year end, Alexander says, explaining that many businesses declare their dividends then.

Business owners often make buying decisions after reviewing the previous year’s financial performance. Other reasons are partly psychological – with a new year’s enthusiasm and optimism – and partly economic.

“Certain people have been promoted and/ or have had salary increases or bonuses, and so believe they can now afford to upgrade. Others have been transferred or have severed ties with their employers and are starting afresh.”

For these buyers, Cape Town is always a good place to buy, says Mike Greeff, chief executive of Greeff Christie’s International Real Estate. Even though property values are rising at a slower rate than in recent years, he says they are still rising, and this, added to the upswing in investor confidence and positive political environment, means it is a good time to invest in property in the Western Cape, and even South Africa as a whole. This is due to the expectation of more realistic buying and selling prices.

“There is also a strong sentiment that interest rates will remain unchanged for the next six months and that is a big plus for individuals looking to finance their homes.”

Dogon Group Properties also anticipates a “serious upswing” in property activity, especially in Gauteng where chief executive Denise Dogon says there are still quality, affordable properties with equal good value on offer. “This is definitely a very good time to purchase property in South Africa.”

Despite a decline in property activity last year, she says the company still achieved record sales in Cape Town.

Christie’s

continue to be Greeff

International Real Estate’s best performers year after year, with Greeff saying that, historically, the investment market is always the busiest, with the highest capital growth in the areas around the University of Cape Town and the Claremont CBD.

“Schools are always a big drawcard for buyers, so areas with top schools are also attracting good prices and excellent capital growth. Cape Capri, Chapman’s Bay Estate, Blouberg and Sunningdale are also areas to keep an eye on as the return on investment is very good.”

Buyers should look for properties in popular areas close to schools, transport, shopping centres and medical facilities, Dogon advises. The southern suburbs is an example. “Dogon’s sales office in this area experienced a 55% increase in sales figures compared to the previous year.”

has always, and will always, prove popular too, Alexander adds. “As respected property economist Erwin Rode always says, they aren’t making any more land on the Atlantic seaboard so best buy it now.”

Echoing this, Dogon says the Atlantic seaboard has always seen good returns on properties.

Areas that show high growth include those on the Atlantic seaboard from Green Point all the way up to Clifton and Hout Bay, says Milan Milosevic, co- founder of Wealth Alliance.

House prices in these areas grew about 22.9% in 2016, and saw similar growth last year. Property types proving to be the most popular in the Western Cape, and offering the best returns, are free-standing homes and townhouses priced from R1.5 million to R2.5m, Alexander adds, saying this market offers great rental returns and value escalation.

“There are many buyers in this bracket, making such properties more liquid too.”

that offer excellent value for young families looking for small three-bedroom homes with pools include Hout Bay, Milnerton and Table View.

Alexander also encourages buyers to look north, where areas like Brackenfell have performed “exceptionally well” over the past five years, and Durbanville, Somerset West and Parklands are predicted to see strong performance over the next five.

“Just look towards areas with new development activities. These are often high-growth areas.”

are becoming increasingly popular too, Greeff says, with their demand growing due to convenient locations, sense of community, and security.

PICTURE: PIXABAY Cape Town property price growth still makes it a good place to buy and traditionally the first quarter sees increased activity.