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A staff member of mine recently sent me an article she had found on the Internet asking me what my opinion of the article was. My opinion of the article was that it was simply public relations blurb – in other words, a press release or type of a press release issued by a firm of estate agents. That is certainly how it reads and I think it contains a number of statements that will be hard to back up factually.
It is one thing to claim property prices are going up and the article said in South Africa prices are going up 11% a year – it is another thing altogether to detail in which market they are going up. I can personally vouch for the fact that in the high-end market in Johannesburg prices have been stuck in a terrible rut for years. In fact, nobody selling in Blair Atholl is selling at a profit and, from my own personal experience and that of friends, they are in fact selling at a 15% to 25% loss over a three year period. So, in that respect, the article suggesting that the overall property market is up 11% a year is nonsense.
I do believe in property at certain times, but it would also depend on the three golden rules of property which are location, location, location! The fact of the matter is most high-end developments are not selling very quickly at the moment and the growth that I have seen and am aware of is in the below R1 million market. You cannot of course take price growth in that particular area and then extrapolate it to the whole market or suggest, once those houses are worth more and more, that the increases will continue at the same rate. There is clearly a demand in that particular market at the moment, but that does not mean that that particular market, as those houses grow in value, will continue to grow to the same extent – it might be for example that the demand will continue to remain in let’s say the R500,000/R600,000 range.
If I was buying a new property right now I would really be looking at Cape Town. Cape Town is a market that has shown the most substantial increases in the last few years and while it can often be dangerous to chase a trend, I just don’t think the returns in Johannesburg have been good – and they have not been good for a long time, other than in a few ideal locations.
At the end of the day, I am not an economist and most economists and financial experts seem to get most things wrong most of the time, so I have no idea whether they would be right or not, but based on my own experience right now, if I was not buying in Cape Town, I would probably rather rent a property and invest my money elsewhere, although the stock market is looking very highly priced for now.
Posted by Michael de Broglio on Wednesday 14-Jun-17
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Comments
Cornelie said:
on Monday 03-Jul-17 04:59 PM
Property is always a good investment to have but also the location you can buy at a well know area and just like that it can become a bad area. I don't think there is a right time it’s a gamble you take.
Nicolle said:
on Monday 03-Jul-17 03:13 PM
At age 28, I have "owned" (and by owned, I do mean that the bank owns my home and me) for the past two years. Let's consider the cons of owning your own home:
1. The responsibility of ownership (Gen Y has difficulties with this);
2. Coming up with the deposit (generally at 10% of the sale price);
3. Inflexibility, you cannot just pack up and leave (Loss of freedom of movement);
4. Paying for and dealing with maintenance and repairs (awful);
5. Making a long term commitment (Gen Y can barely make up their mind between chicken / fish or beef, how are we suppose to commit to something that could take anywhere between 10-25 years);
Being a home owner is definitely not that glamorous.
Tersia said:
on Monday 03-Jul-17 08:04 AM
I have no idea when it comes to buying property. I also think Cape Town would be a good idea, tourist flock to the Cape and everything is just better there. I have also thought of the idea to buy and then rent out, but the hassles of being the owner and having to deal with complaints and other people damaging your property, I really did not see myself going through that.
Sinead said:
on Friday 30-Jun-17 08:32 PM
"The best time to buy a home is always five years ago" so we are always 5 years behind. I do believe this.
Property is a good investment! Depending on the location of course.... Cape Town is also somewhere I would most definitely buy property if I could
Liesl said:
on Thursday 29-Jun-17 03:07 PM
I always have questions around this topic and thus found its content very interesting. I have heard of so many people that bought property years ago and down the line what used to be a good neighbourhood is by no means anymore. Then there are people that say renting is the worst idea as you are only paying off someone elses bond. It's certainly a topic I won't mind getting solid advice on
Jadine Richards said:
on Wednesday 28-Jun-17 11:56 AM
I would not be controlled by price increases or decreases. I believe your decision re price and area depends on 2 factors:
1. Where does my family live?
2. Do I want a home or an investment?
Melissa van Tellingen said:
on Wednesday 28-Jun-17 11:37 AM
Me and my husband recently bought property. It's such a big decision and one that no one should take lightly. It's important to know where you are buying and how it will be in future.
Thabitha said:
on Monday 26-Jun-17 02:15 PM
When comes to economy you will never come right and I also believe that location is the key when come to property.
Liz said:
on Monday 26-Jun-17 07:54 AM
I agree that if you are able to buy a property of your own, you should. It makes more sense than paying off someone else's. It is also true that location is very important and I think one should do a lot of research when considering where to buy property , as many places that seem like good investments now may change into less desirable locations later on.
Ashleigh said:
on Friday 23-Jun-17 08:20 AM
I really want to buy a property of my own but its also a big choice. There are pro's and con's to renting and buying. Renting, you not bound to one area but you are paying off someone else's bond. Buying, you are bound to one area but its your own. Making the right choice of the location of buying is def the biggest choice you have to make and hope that its a right one.
Lourien said:
on Wednesday 21-Jun-17 02:54 PM
Property is always going up and down, it all depends on the location but I have to agree with the market in JHB, what you pay for a property is certainly not worth it, as you either buy an old house on a reasonably sized property or you are buying a brand new development where you are so squashed and its so small and its actually just not worth the price at the end of the day. I actually think it would be better to buy a small plot with a few sheep running around on it that will generate a small income as well and as an investment, far away from this busy city where you will have a peaceful life.
Joyce said:
on Wednesday 21-Jun-17 01:42 PM
I sounds like if looking to buy a property for investment and for good returns, need to carefully check the areas to look from
Jolene said:
on Wednesday 21-Jun-17 09:21 AM
I don’t have much knowledge about the property market but I do think it is better to pay off your own house rather than someone else’s. I have to agree with you that location is very important, I will rather buy a smaller house in a better suburb than a big house in a not so great suburb. You also have to look at security which I think is another important aspect.
Sarah said:
on Wednesday 21-Jun-17 08:24 AM
Location is the key with property, there is a lot of properties that are going to n sell now, with our country going down hill
Nikita said:
on Monday 19-Jun-17 04:25 PM
As much as we complain about the ever rising price of property in South Africa we are actually very lucky. What you pay in most other countries and what you get is nothing compared to South Africa. There are small blessings.
Suzanne said:
on Monday 19-Jun-17 09:28 AM
I don't know too much about property, but my mom sold her larger house on the south coast for a smaller place in Randburg that cost almost double. Some areas are obviously more profitable and others are down. I don't think looking at the property market in SA as a whole is very accurate, you would need to look at it 'location wise' as you said. I am still very happy with renting.
Brenda Du Toit said:
on Monday 19-Jun-17 09:00 AM
Buying a property is always better than renting as you are growing your investment while living in it and can also use the profit to do upgrades around the place but be sure you can afford the smaller things such as rates and taxes maintenance insurance ect that also come with buying a house that you don't always pay when renting.
Lucretia said:
on Monday 19-Jun-17 08:56 AM
I think the best thing to do is buy either a repossessed or assisted sale home in a nice area. That way one can get a good home at a lower than market value price and then make some money should you want to sell because you have come in at a lower price on purchase. I bought before like that and it was good for me, I have bought like that again and I hope it will do the same again when I want to sell. Not that i plan to sell in a hurry.
Angelique P said:
on Thursday 15-Jun-17 02:17 PM
Properties are so expensive these days and then when you want to sell the house you get nothing back. It’s scary to see that so much people are selling their houses. I know in our town every second house is for sale. I believe that it’s better to buy a house than to rent it that way you pay your own house off and not someone else house.
Angelique Jurgens said:
on Thursday 15-Jun-17 12:43 PM
I don't know about renting because these days in good area's they rent out places basically at the same amount or just a little less than what you would pay on the bond. Granted this is without taking rates, levies etc into consideration but I would rather own a place than pay off someone else's bond. I think in the long run if you saved enough money then buying is better than renting. I have been looking and location is definitely key - the closer to work you want to be the more you must pay, but then again further away from work could be more safer i.e. in an estate but then you looking at paying a fortune on top of high rates and levies. I also see quite a bit of house flipping going on, definitely a risky business - but there are some "bargain" places in Lonehill/Fourways that you may make a small profit on but then again it all depends on timing... If no one is looking at buying you will land up sitting with a property in your hands that is no longer an investment.
Helen said:
on Wednesday 14-Jun-17 01:55 PM
This is so true, that so many properties at this moment are on sale. Majority of people are selling rather then buying property. Some even desperate to sell that even undervalue their property. Still believe that buying property is good investment even if someone is paying bond off for you. Let's say getting second or third property now and rent it out. By the time our kids are at the age to move on their own there is the property ready for them to move in.
Henrietta said:
on Wednesday 14-Jun-17 01:04 PM
I have also notice that more and more houses is for sale lately. People downgrading I can not tell but it seems like that is more the case. I agree with the downgrading of our country I suppose now is not the best time to buy property. Location, location and location. Ridiculous to think that if you want a safe and nice looking neighbourhood you will also look at a nice looking price.
Michelle said:
on Wednesday 14-Jun-17 12:47 PM
In the long run I think property is a very good investment. I`ve also noticed recently that prices for houses are ridiculous, you pay for where the house is situated not how it looks. Location of property is very important. You can’t pay a huge amount for a place that is located in a very dangerous location.
Nina said:
on Wednesday 14-Jun-17 11:11 AM
It is quite clear that people just can't afford to spend ridiculous amounts of money on property at this stage or any time soon. I agree that if you decide to invest in property now, it would be better to look at the below 1 Million flats/apartments which will most likely always be a good investment.
Juliet said:
on Wednesday 14-Jun-17 09:41 AM
I recently read an article which discussed how now is definitely not the time to sell property in SA. It is a buyer's market if you can afford to buy. I would buy in Cape Town Southern Suburbs but it is Very expensive for a tiny place with no garden. Northern Suburbs are becoming more popular with young families because still in CT but you get a garden.
Dune said:
on Wednesday 14-Jun-17 09:15 AM
I also know of 2 people who's houses have been on the market for over a year and they are struggling to sell it. One has already dropped its price below market value. With the interest rates going up and the state that our country is in at the moment not a lot of people can afford to buy houses.
brumilde said:
on Wednesday 14-Jun-17 08:46 AM
property market is like any other marker it goes up and down, either you read the signs and do research and you gain or you try your luck and loose out.but property is still an asset at the end of the day, unlike your car, the minute you drive it out of the dealership you loose the value
Daniella said:
on Wednesday 14-Jun-17 08:31 AM
I have always been extremely fascinated about Cape town , and I definitely think that one day if I win the Lotto, I will definitely be buying property in Cape Town.
Alexis said:
on Wednesday 14-Jun-17 08:19 AM
Location is key when it comes to property. Judging by what you are saying, then yes, clearly the 11% increase is not correct - if people are losing more than gaining when selling.
Jessica Apfel said:
on Wednesday 14-Jun-17 08:15 AM
Location is certainly a price determinant - 5 years ago Maboneng in JHB CBD may not have been considered an investment but the price of property within that area has trebled.
Bianca N. said:
on Wednesday 14-Jun-17 08:13 AM
There are more and more houses for sale lately which goes to show that more and more people are downgrading to more affordable housing. I think if you are looking to buy a house, you need to be patient and look carefully before you buy.
patrick said:
on Wednesday 14-Jun-17 07:52 AM
with our country been down graded in all directions property is bound to take a knock including everywhere. Affordability is going to be a problem across and everybody will down size to small areas.
Bianca R said:
on Wednesday 14-Jun-17 07:42 AM
Wow, that is quite a loss when property is supposed to be a great investment. I have noticed recently a substantial increase in the amount of properties that are for sale, it seems like every second house in a street is for sale and people are surely downgrading. Our landlord is currently selling our property and the two others that he owns and not a single offer has been forthcoming at all, people are just going to have to sit tight or settle for a lower offer instead of actually making a profit. We recently purchased a property for an absolute steal but I suppose you will always find a great deal if you look properly and have patience to persevere.
Clare said:
on Wednesday 14-Jun-17 07:31 AM
This is an interesting topic I was also looking at buying a house however its also hard because to find one that's in a good area is a whole new topic on its own.
david said:
on Wednesday 14-Jun-17 07:08 AM
i think the right time is still on the way.
interest rates go up, and first the toys go, then cars downgraded, then the house downgraded. there are going to be a lot of properties on the market, and prices will come down. those who have saved will be able to pick up bargains...
Johannesburg based attorney specializing in personal injury matters including Road Accident Fund claims and medical negligence matters. My interests include golf, reading and the internet and the way it is constantly developing. I have a passion for life and a desire for less stress!
