Why buying property in South Africa in 2022 is a good investment
Despite the upheaval we've experienced over the past two years, property in South Africa remains a good investment. Many first-time buyers have taken advantage of the interest rate cuts of 2020 to take their first step onto the property ladder. Buyers who were already homeowners have been investing in bigger properties and "semigrating" to other parts of South Africa now that they are no longer tied to an office. M Worx Property Partners considers some of the factors that make real estate in South Africa a great investment in your future.
The proven resilience of South Africa's property market
The last couple of years have showcased the resilience of South Africa's property market, with buyers responding to the COVID-19 pandemic by showing a desire for bigger properties where they are able to work from home and live comfortably. Even in tumultuous times, real estate investments have proven themselves to provide a good return.
The interest rate remains low
Despite the first quarter of 2022 seeing rises in the repo rate, which has been at historic lows since 2020, the prime interest rate is still far below pre-pandemic levels. Each increase in the interest rate this year has been just 25 basis points, which amounts to an increase of about R150 on a home loan of R1 000 000. These small increases are unlikely to have a significant impact on a homeowner's budget and would-be buyers should also remember that if they are buying for under R1 000 000, they will not need to pay transfer duties. The affordability of real estate remains largely unchanged, making it possible for many South Africans to invest in property.
Banks have a healthy appetite for risk
South Africa's banks are currently willing to offer home loans of up to 105% in certain circumstances, which is great news for would-be buyers who have not saved up a deposit. These 105% bonds are only available if you're buying property for R1.8 million or less, but this offering can provide a lifeline for first-time buyers and those looking for smaller properties. On the other hand, it is worth remembering that if you're able to save up a deposit towards your property, it is likely that you'll get a better interest rate. Whether or not you have a deposit, the relative ease of getting finance makes property a good investment.
Getting a great home loan deal
If you're applying for a home loan, then you need to be aware that the algorithms and calculations used to determine whether your home loan application will be accepted - and the interest rate that you will be charged - vary from bank to bank. The best way to get your home loan is to apply through a bond originator, who will apply to all the banks on your behalf, leveraging their relationships with the financial institutions to get you the best possible deal.
Semigration and the appeal of the Western Cape
As mentioned, many people are looking to buy homes in parts of South Africa that offer more appeal than their previous homes. With its political stability, lower loadshedding levels and natural beauty, the Western Cape is a natural choice for many semigrators. Other factors making the Western Cape a popular place to call home include the province's high rate of clean audit opinions and well-run municipalities.
While small towns and villages are popular with many semigrators, others still make proximity to a big city a priority, and this trend continues to drive popularity in apartments and sectional title properties in Cape Town - especially those that offer work/life balance with facilities like pools, gyms and workspaces. Stable demand for such properties makes buying a property with the intention of renting it out a great investment.
If you'd like to know more about how property investment safeguards your financial future, or you'd like us to help you find your next real estate investment, contact M Worx Property Partners today.
