There has become an increasing appetite for South Africans to invest in property – whether it is buy-to-let property or listed property. Property has been seen by many as a low risk investment with the potential of producing excellent returns.
There are many different opinions on whether one should “time” their purchase depending on the value and return on investment that is associated with the purchase. This is usually a factor for people looking to buy and sell a house relatively quickly. However, Dr. du Toit, a specialist in this field notes that, “Trying to ‘time’ the market, as investors in shares on the stock exchange do, is only necessary for those who are speculating with property. Speculating – buying with the hope to sell again quickly at a significant profit – is not property investment”.
He further explains this point through illustrating the value of a home in the mid –eighties versus how much it would sell for in 2005. “In the mid-eighties, you could buy a spacious four-bedroom house with a double garage for about R100 000, and a two-bedroom flat for R25 000. That same flat was selling for R400 000 in 2005. If you had bought it in 1985, it would have been paid off by 2005, worth a whopping R400 000 and producing a passive net rental income of R2 500 per month! Today, it would be worth closer to R500 000 and it would still be producing a rental income “only now that rental income would be around R3 500! Had you known this in 1985, would you not have considered it a good time to buy, irrespective of the property price growth rate at the time?”
That is why it is important to understand that the best time to invest in property in South Africa is now. While short –term fluctuations may be a factor for some it should not be. If you were to fast forward to 20 years from now to 2032, you will see why there is no time like the present to invest in property.