Prices have risen 15 per cent over the past 12 months and 25 per cent over two years, and local real estate expert Samuel Seef, chairman of Seef Properties, says the outlook remains positive. Economic growth has been good, and inflation and interest rates remain stable, despite a recent 0.5 per cent increase. I dont see a correction in the shorter term.
And, of course, that football tournament will help. The infrastructural spending will spark an all-round increase in wealth, and a large part of this will go into property, creating more demand, he says.
International property investor Prestige Group is rather more cautious. Prices may be rising 22 per cent a year and yields a reasonable 6 per cent, but capital growth is slowing, and local mortgage rates are expensive at around 8.5 per cent.
Chairman Paul Coghlan warns that the South African government is currently considering whether to ban or restrict foreign ownership, blamed for pushing up prices. Financing can already be difficult to get if you are not a resident you will need a 50 per cent deposit, or 20 per cent if you qualify for offshore private bank financing in Mauritius or elsewhere.
Paul Beadle, a British journalist based in Cape Town, says prices are expected to rise 15 per cent this year, but some fear the market is overpriced and a correction due. The good news is that the buying process is fairly straightforward, but estate agency fees can be as high as 5 per cent, although negotiable.
South Africa is still a dangerous place. Buy-to-let customers will also have to spend money on security, which can cost £200 to £300 a month.
South Africa has also suffered its fair share of booms and busts, in 1984, 1988 and 1994. History might suggest the next one is overdue, so don’t overstretch yourself and invest for the long term.
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