Many concerns have been raised following a period of slowed house price appreciation across the country. While some of these concerns are valid, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, explains that others are easily overcome if you understand certain things about the current housing market.
1. House Prices are growing slightly below inflation
The bad news is that house prices have been growing at a rate below inflation for some time now. The good news is that the margin has been small and is closing. Standard Bank reported national house price growth to be 3.9% in July. This is just below the current inflation rate of 4%. Goslett reminds homeowners that real estate is a long-term investment and that periods of house price decline in real terms is therefore normal. “The ebbs and flows of the market will even out over time to yield a stable and substantial return when it eventually comes time to sell,” he explains.
2. Real Estate is still a safe long-term investment
Unless you are hoping to make a quick profit, real estate is still one of the safest investment decisions a person can make if viewed as a long-term investment. While it is possible to make a profit off the sale of a property in the short-term if market conditions are good, the chance of making a profit in a downward market such as the one we are currently experiencing in the short term is a bit of a gamble. “But, statistics on house price growth over time prove that, in virtually every instance, the homeowner will stand to make a substantial profit off the sale of their property if they choose to sell after at around the ten year mark or later,” Goslett explains.
3. Now is a good time to enter the market
Instead of focusing on the negative, investors should notice the many opportunities that the current market offers them – especially within the luxury market which has been hit the hardest by a poorly performing economy. Buyers who purchase property now have a chance of entering the market while prices are low, which is far better than waiting to purchase when prices begin their steady upward climb.
According to Goslett, while current market conditions are tough, the South African real estate market has survived through far tougher seasons and is sure to make it through this period of house price decline in real terms. If you are still uncertain of the investment value of your home, get in touch with a real estate professional from the largest real estate brand in the region.