Why it is still a great time to buy property
Category Market Update
Despite the recent interest rate hikes it still a good time to invest in property. Naturally with the interest rate now higher compared to the last three years, buyers will need to budget for higher repayments, but there are many benefits for buyers right now.
While there is no right time to buy and it depends on the needs of the buyer, the adage "buy low, sell high" means that it is always good to buy when the market is low because you can then benefit when the market takes an upturn again.
Although buyers may be tempted to think that it is better to wait for a lower interest rate, bear in mind that with a lower interest rate comes high demand and sellers will want higher prices by then.
Here's why it is still a great time to buy property:
Prices are flat. Price growth has declined month on month since about mid-2021 and the growth over the last year has been quite flat. At the same time, the number of buyers in the market has reduced which means that asking prices are under pressure.
More property stock to choose form. Since the market has slowed down and properties are taking longer to sell, there are now more properties on the market. Buyers are therefore able to take advantage of the fact that there are now fewer buyers and a greater selection to choose from.
Bank lending is still very favourable. Recent figures from Seeff's mortgage originators show that bank approval rates are still at the highest levels in over a decade while deposit requirements are still at the lowest level. Qualifying buyers can even find rate concessions.
Sellers may be more willing to negotiate. While we are not in a market where bargain prices will be accepted, sellers in the current market may well be willing to negotiate their price for a faster sale, especially if it is a cash deal or the buyer is already pre-approved for finance.
People will always need a place to live. This makes property a particularly good investment. It is a stable asset and unlike other property classes where you could lose money, property tends to retain its underlying capital value on top of the capital growth that you can achieve.
Property builds wealth. The sooner you buy, the sooner you benefit. Purchasing a property now means that you are paying off your own asset rather than someone else's rental property. While rents will continue rising as time goes by, the repayment on your property will remain relatively fixed.
The Cape Town property market in particular has proven to be an excellent store of wealth. The outlook for the Cape market remains favourable and you simply cannot go wrong by investing in property here now.
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Author: Gina Meintjes
