Investor faith growing again

Faith in property as an investment is beginning to rekindle, say the property experts.

Gerhard Kotzé, CEO of the ERA South Africa property group, says this discernable trend is mostly the result of somewhat improved economic conditions, lower interest rates and growing consumer confidence. “Interest in property as an investment has never really gone away, but it has been in hibernation for much of this year. Now that things are looking up, though, it’s awakening again.”

He notes, however, that the rules have changed, and that selectivity and caution is now very much part of the buying equation. In addition, the long-standing debate about property versus other assets is once more under the spotlight.

“In this regard, our view is that everyone should own at least one home, and that additional properties are arguably relevant once more as part of a general investment portfolio along with other assets.

“The positives traditionally associated with investing in residential property remain intact. It offers simple, hands-on control, it involves no balance sheets or annual meetings and there’s no reliance on the competence of boards of directors and the performance of the companies they control.

“You can choose your own tenant. You can choose how much or how little to spend on a property and the tax system favours your investment in that your capital gains are taxed minimally at an effective 10%.

“Also, according to figures from Absa, property has actually outperformed other assets including shares, gold and fixed deposits over the past two decades, suggesting a consistent pattern of growth over time notwithstanding slumps such as we have just witnessed.”

Simply put, property remains a store of value, provided, as always, that the nvestor/homeowner appreciates that it’s a medium to long-term investment and not something in which to speculate, Kotzé says.

“The key to success is not timing the market but time in the market. But having said that, now is a good time to advance property investment plans, as the market does appear to have bottomed out.”

Article by: