We’re #3 … but a very strong three!
And recent analysis in The Economist supports this – especially in South Africa. Their recent survey indicates that South African residential property is ranked third in price growth at 11.1%. This is a respectable figure and is ahead of the current inflation rate of 5%. The MD of the Rawson Property Group, Tony Clarke however cautioned that this growth rate was expected to slip below 10% in the current year while inflation could break through the 6% level.
But the great news for South African property investors is that while there may be adjustments to these rates, the changes won’t be too dramatic. The two countries ranked above us in ‘growth’ in this survey however, Hong Kong and Brazil, will probably have much more acute changes. Presently, Hong Kong’s growth is at 24.5% while Brazil’s is a more modest 12.8%. Their figures would probably suffer major corrections.
According to the survey, it also indicates that the rent market in South Africa is undervalued by 2% while the rent in relation to income is overvalued by 10%.
But what do all these figures actually mean to you, the property investor who is looking to make some growth on their buy-to-let investment?
In a nutshell it means that the property you own is growing nicely, staying ahead of inflation and the tenants you have in place are in a much more comfortable and affordable place than their counterparts in other parts of the world! And all this boils down to one thing – your property and tenants are pretty secure and will continue to give you decent growth and income stream for some time to come because they are getting realistic value for their money and their incomes can support what you are asking from them.
To put it another way, South Africa’s property market seems to be correctly valued and the amounts of rentals that landlords are charging are accurately adjusted to levels of income.
Compared to some other countries, South Africa’s figures and projections are modest but the need for radical adjustments in your rentals don’t appear to be necessary. If you lived in Australia, Canada, France or Spain, for instance, you’d have to make some pretty drastic cuts in the rent you asked if you wanted to keep a tenant in situ.
But you don’t have this problem – your property is in South Africa – and while it is good to look at figures and reports from around the world, it’s comforting to note that for all the negatives we might hear about the cost of fuel or the exchange rate, the property market is particularly healthy, well adjusted and will continue to grow steadily at the right rate. Rather like a well-nourished and healthy child.
When investing your own capital and making financial commitments as you use property investments to grow your wealth it is vital to get the very best advice in order to maximise the potential. For advice and guidance, look to the independent specialists who have the right team of professionals working with them that gives them the track record of success, integrity and security that you want.
The comforting thing about history is that it repeats itself. And in the property investment business this is no exception. Contact us at IGrow Wealth Investments – our team of property specialists and I will help you on the road to achieving the success you deserve.