Here’s why you should be planning to buy property now
One of the most frequent questions being asked in the real estate sector at the moment is whether this is a good time to buy a home or an investment property. “
And the answer is yes, if there is any way you can afford it, you should start planning to get into the market as soon as possible,” says Berry Everitt, CEO of the Chas Everitt International property group.
“The reason is not only that you will stand to make substantial gains if you do buy but that you will also be helping to build up our economy and create employment. Rising demand for housing will eventually mean more construction, which is a major employer, but in the meantime every property bought will help to generate more jobs in sectors like transport, the manufacture of furniture and other household goods and the supply of various household services.”
Ask anyone in real estate, he says, and they’ll tell you that the people who have seen the best returns on their property purchases in the past few years are those who bought soon after the Global Financial Crisis of 2008/ 09 began. “These are the buyers who didn’t hesitate, didn’t hang around to see if property prices or interest rates would fall even further, and definitely did not wait until other people started making a move to dive into the market.
“And while we don’t want in any way to make light of the Covid-19 crisis that is currently playing out around the world or the economic impact - which could turn out to be worse than that of the GFC in the short term - it is creating excellent opportunities specifically for potential home buyers and investors who do have access to funds now and are prepared to take a five to 10-year view.”
Everitt says factors currently in favour of property buyers across the world include:
- * Declining interest rates which make it easier to obtain a home loan and afford the monthly repayments;
- *Lower property prices as owners and investors who cannot afford to keep their existing properties release them on to the market and hope to sell them quickly; and
- *Rising demand for rental homes from those who don’t have the means to buy now or prefer not to.
“In SA, we also have several more factors which are specifically in our favour at this stage, the first being the higher gold and platinum prices recently which has boosted our balance of payments, and the second the dramatic drop in oil prices which means lower inflation for us that will very likely make it possible for the Reserve Bank to lower interest rates again this year.
“Another positive for the SA market is that many of those who were contemplating emigration within the next couple of months have put their plans on hold – and may do so indefinitely depending on the effects of Covid-19 on other economies. Their money will thus be remaining in SA and at the same time, the decline of the Rand in reaction to the Moody’s rating downgrade in March means that SA property is now that much more affordable and attractive to overseas investors who have dollars, pounds or euros to spend.”
So while it is a natural inclination to shy away from making major decisions or financial commitments when markets are in turmoil and things look gloomy, he says, it is important to note that the most astute investors wait for exactly these conditions, because they know that the biggest gains are made when you are willing to risk going against the crowd.
“Consequently, we are urging those who were contemplating a home purchase or a property investment this year to proceed with those plans now if it is financially possible for them to do so, and not to be deterred or distracted by constantly changing news reports and shifting opinions about what might happen.
“The truth is that most economies will go into a decline as a result of the Covid-19 disruption to world trade, that some will be worse affected than others, and that some countries have more resources than others to put towards recovery. But it is also true that the property market, unlike others, is essentially driven by the fundamental human need for somewhere to live, and that there has been an increase in property demand and prices after every previous global financial disruption for the past 50 years.
“There is every indication that this pattern will repeat itself – and for those who might say this point of view is insensitive to those who find themselves suddenly unemployed because of Covid-19, we say that building up SA’s property sector as fast as possible will be one of the best ways of creating jobs and making sure that they get back into employment.”