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Intelligent Property Investment

Why do I believe the Property Sector in South Africa is still a good investment?

21.01.23 06:02 PM By Jaco

The South African real estate market has been a solid investment option for decades, and even in times of economic recession, high interest rates and high inflation, the market remains a viable option for investors.

According to a report by PwC, the South African real estate market has shown steady growth, with a compound annual growth rate of 4.2% between 2000 and 2019. This growth is driven by a strong demand for housing, as well as a growing population and a shortage of housing supply. Despite the economic challenges faced by the country, the report shows that the real estate market has remained relatively resilient.

One of the key drivers of the South African real estate market is the high demand for housing. According to a report by the National Department of Human Settlements, the country has a housing backlog of over 2 million units, and this demand is expected to continue to grow in the coming years. This high demand for housing, combined with a shortage of supply, has resulted in property prices remaining relatively stable, even in times of economic recession.

Another factor that makes the South African real estate market a good investment option is the relatively high rental yields. According to a report by the South African Property Owners Association (SAPOA), the average rental yield for residential properties in South Africa is around 8%, which is higher than many other developed markets. This, combined with the stable property prices, makes for a solid investment opportunity.

Despite the challenges faced by the South African economy, such as high inflation and high interest rates, the real estate market remains a viable investment option. The high demand for housing and the relatively high rental yields make it a solid option for investors looking for a stable return on their investment.

It's important to note that the South African market like any other, is subject to market cycles and fluctuations and it's always advisable to conduct a thorough research and consult with a financial advisor before making any investment decisions.


Sources:


PwC South Africa, "South Africa Real Estate 2020"

National Department of Human Settlements, "Housing Backlog"

South African Property Owners Association, "Rental Yields"

Jaco