Is property in South Africa a good investment?
South Africa is, nowadays, a relatively stable country
1.Cape Town, South Africa
Cape Town consistently maintains its reputation as one of Africa's premier real estate investment destination. Its stunning beaches and favorable climate make it especially appealing to retirees and foreign property buyers.
If you choose to invest in a property in a desirable location, you can expect to earn a high rental income. Investing in property in South Africa provides you with the security of owning a tangible asset. Unlike stocks, which can be volatile and unpredictable, property is a physical asset that you can see and touch.
Gerhard Kotzé, CEO of the RealNet Property Group, believes that from an investor's point of view, “We are now at or very close to the bottom of the market cycle and that the first half of 2024 will be one of the best times to buy real estate that we've seen in the past decade.”
Foreigners can purchase and own immovable property in South Africa without restriction - non-nationals are subject to the same laws as nationals. The only ineligible people are illegal aliens who are not allowed to own immovable property in SA.
Residential properties are generally considered to be a safe and stable investment, and are likely to continue to perform well in 2023. With the growing trend towards remote work and flexible schedules, there may be increased demand for properties that offer space for home offices or outdoor areas for recreation.
“A deposit of R35 000 can secure you a property to the value of R1 million, and a deposit of just R18 800 can get your foot in the door with a property valued at R550 000. We found such investment opportunities around the country, even in Bloemfontein,” says De Waal.
Ultimately, it's currently cheaper to buy, Smee said. Due to slow House Price Inflation (HPI), buying a home, be it off-plan or from an existing owner, is ultimately more cost-effective than building one in the current climate.
Buy-to-let is the bread and butter of property investment
With careful planning, buy-to-let provides a reliable source of revenue in the long term. You can use rental income to pay off the bond on the property. You can estimate the rental income by looking at rental prices for other properties in the area.
A fixed deposit is a safe and reliable way to reach your financial goals by building wealth that lasts. All you need is a R500 minimum opening deposit to get a Fixed Deposit account at African Bank, where South Africa's highest rate of return resides!
How safe is African Bank in South Africa?
It assigned African Bank Limited with a long- and-short- term local and foreign currency deposit ratings of 'B1/NP', with a stable outlook assigned to the long-term deposit rating. Moody's also assigned a long-and-short-term national scale bank deposits rating of 'A3.za/P-2.za'.
Whilst spring and summer are typically the best times of the year to buy a home, this winter we have seen an unusual increase in the market of both stock and buyers since the Covid-19 pandemic. Your Leadhome real estate agent will be knowledgeable on these issues.
The average age bracket of the first-time buyer in South Africa is 35- to 40-years-old, but Nondumiso Ncapai, managing executive at Absa Home Loans says it is “never too early or too late” to buy a home. This decision depends on what an individual can afford and their life-stage needs.
House-buying season runs from spring through summer and is typically when people put their houses on the market. It's a time when people's spirits are up, and the sun is out, making their homes look more appealing. “This period is also known as a 'buyers' market',” says Chahid Haigh of RE/MAX Living.
Transfer duty is only required on properties valued at more than R1 100 000. Certain conditions exempt you from transfer duty, such as acquiring a property through marriage in community of property.
According to the latest ooba Home Loans oobarometer, the average house price in South Africa dropped by 0.4% from R1,431,712 in Q2 2022 to R1,426,656 in Q2 2023. The average house prices for first-time homebuyers also dropped by 2.6% from Q2 2022's R1,150,256 to R1,120,173 in Q2 2023.
Unlike some countries, South Africa doesn't have an investment visa which allows you to get a residency permit by investing in property. If you're interested in routes to residency, there's full information on all South African visa types here on the Department for Home Affairs website.
This was due to five industries recording negative growth between the second and third quarters of 2023. Old Mutual's chief economist Johann Els told 702 that it is highly possible the country will slide into a technical recession at the end of 2023.
After faltering in the fourth quarter of 2022, the South African economy expanded by 0,4% in the first quarter of 2023, narrowly avoiding a recession.
Holiday home rental can be a great way to earn income from a property while also getting to use the property yourself when it is not rented out. Holiday home rental can be a great way to diversify your portfolio and reduce your risk.
What salary do you need to buy a house in South Africa?
How much do I need to earn to qualify for a bond? Research from Lightstone property showed the minimum salary for buying a home to be around R22 600 (assuming a 20-year repayment term).
Research from Lightstone Property shows that the minimum salary to buy a home would be: R22 600 in the Western Cape, where the average property price is R680 000 (the most expensive out of all the provinces). R12 600 in the Eastern Cape, where the average property price is R380 000 (the lowest of all provinces).
Saving up for the deposit
The deposit usually amounts to 10% to 20% of the property purchase price. A deposit will improve your chances of home loan approval and reduce your interest rates and monthly repayments.
Yes, property prices are higher due to demand exceeding supply most of the time, but that's a onetime hit and remains an asset on your balance sheet forever. I pay the municipality R2500 a month including electricity for which I get at least R2500 worth of service.
The most recent data from the Oobarometer said that the average house price in South Africa was R1,422,992 for Q4 2022.
