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Is it a good time to invest in a second property?
Experts agree that properties above RI ,5m offer little capital growth and extremely low yields, while properties below R500 000 hold the best value.
The growth opportunities at the lower end of the market are huge,” reckoned Allister Long, MD of property services consultancy, Powerhouse.
Demand for housing is outweighing supply and this will keep the market exceptionally buoyant, he explained.
In the residential market, the further down the housing spectrum you go, the better the yields will be, said FNB’s property strategist, John Loos.
He said that 2007 is expected to be the “bottoming out year” with price inflation of between 11% and 12% average for the year.
Long reckoned the tightening seen at the end of 2006 will continue, particularly in the upper end of the market, where he prdited_singIe_digitgrowthhi&year.
Next year will be the year of a turnaround in house prices, added Loos, who explained it would be because of a combination of ongoing solid economic growth and lack of building supplies.
“Price growth in the residential property market is not just about interest rates,” maintained Loos. He reckoned there wouldn’t be another rate hike this year but expected mild cuts towards the end of 2007. If interest rates don’t go up again, it will be a good time to enter the property market, said Long.
He pointed out that in a rising interest rate environment, affordability is always as issue.
“You have to ask yourself if you can ride out the storm if there is another hike or if there is no rental income,” said Long.
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Posted on Thursday, February 22, 2007 (Archive on Wednesday, February 28, 2007)
Posted by hayleym Contributed by hayleym
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