Is residential property a good investment right now?
Category News
With the Corona virus, on top of a whole range of other economy-threatening factors (the mishandling of state owned enterprises, particularly Eskom, widespread corruption, massive unemployment and huge fiscal debt) South Africans are now less confident and more uncertain about future economic conditions than ever before, says Rowan Alexander, Director of the Cape Town estate agency, Alexander Swart Property. These doubts, he says, are now surfacing in the property investment sector.
"In the mid-2000's sub-prime recession, property was central to the whole problem; the crash was caused throughout the western world by reckless over-lending on property, and far too liberal loan policies which enabled borrowers to over-commit without security. The current slow-down has far wider causes; property is not the main cause but it is very definitely being affected," said Alexander.
He is regularly questioned whether property is still the good investment it became after the 2008 to 2010 recession. His answer is yes, provided you are in the right areas and price brackets
"In the nine year run-up to 2019, residential property in Cape Town by and large performed well; in the middle class Northern Suburbs, working class primary home market values effectively doubled - and those who got in early after the crash benefitted the most." Alexander says Kraaifontein, Brackenfell, Durbanville, Century City and Kuils River had seen that level of capital appreciation - although in Durbanville prices fell slightly short of doubling up, but not by much. In all of these suburbs, he added, developers had been active in adding retail and community centres, new schools and competitively priced new homes to the stock. .
"At Alexander Swart we have been telling the public for a decade or more, that these were the areas in which to invest. It came as no surprise to us that they outperformed most other areas. I believe that those who now once again show confidence and buy in well selected areas will benefit hugely in the next five years, as the country gets to grips with problems long ignored, indeed caused by the Zuma regime. There is no reason to hang back and those who do, will as before, miss out on great capital growth opportunities."
For further information, please contact Rowan Alexander by email: rowan@asproperty.co.za or cell phone 082 581 3116
Author: Rowan Alexander
