select
|

Here’s Y buy-to-let should be booming

Generation Y is rapidly becoming known as “Generation rent” in property circles – and bolstering the prospects for buy-to-let investors in the process.
 
“Many members of Gen Y - most of whom are still in their 20s – would like to take advantage of the current low interest rates and buy their own homes, but they are often too weighed down by student loans, other debt and a lack of savings to do so right now,” notes Berry Everitt, MD of the Chas Everitt International property group.
 
“Others are simply not ready to settle down, preferring to rent and have the freedom to travel and try out different jobs or work on a series of contracts. And either way, the trend is positive for buy-to-let property investors.”
 
Indeed, he says, the average age of first-time buyers in SA has shifted in the past 20 years (those in which Gen Y was growing up) from about 27 years of age to 35 – “which means that a significant number of young people are staying in the rental pool for at least eight years longer than they used to, and explains in large part why the demand for rental homes in this country keeps rising”.
 
Writing in the Property Signposts newsletter, Everitt says this demand has also been boosted since the 2008/ 09 recession by homeowners who have had to sell their properties to relieve financial pressure and have been unable or unwilling to buy again.
 
“And the pressure on supply continues to grow, because there has been so little new housing development in the past five years. Last year, according to StatsSA, only about 43 000 new houses, flats and townhouses were built in the whole of SA, with its population of some 52 million people.
 
“In short, everything is in favour of buy-to-let property investors now, so it is somewhat surprising that they currently only account for about 8% of the total number of property transactions.”
 
Back in the “boom days”, he says, almost a quarter of all purchases were being made by buy-to-let investors, even though interest rates were way higher than they are now, and even though there was an oversupply of rental stock and it was a struggle to find and keep tenants.”
 
Everitt concedes that real capital growth has been slow since 2007 (14,9% according to FNB), and that the economic difficulties that have affected homeowners have also affected tenants and kept a lid on the rental increases they could absorb.
 
“However, with interest rates at their lowest in almost 40 years and the demand for rental accommodation set to keep growing (especially when interest rates start to move up again),the current market is offering some outstanding opportunities and we think there really ought to be more excitement now about buy-to-let investing.
“Annual rental yields are rising and are already significantly higher in most areas than the interest one can earn on money in the bank, and property value increases are starting to get ahead of inflation once more.
 
“Consequently, anyone who can muster a 20 or 30% deposit and buy rental property in a good location right now stands to make an excellent return on their investment in the medium to long-term – and certainly a much better return than those who wait until buy-to-let investing is “in fashion” again.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Feb 2018
      RE/MAX Property Associates’ Table View Office, which services property buyers and sellers along the Table Bay coastline and surrounds, has recently sold a home in Woodbridge Island for R11 million – the highest price paid for any home in the sought-after security complex.
    • 23 Feb 2018
      Choosing to invest in an overseas property can be daunting. But as more and more investors recognise the value of a diversified portfolio that includes property outside of their own country of residence, international property investment is growing in popularity.
    • 23 Feb 2018
      The positive change in South Africa’s political landscape is paving the way for an upswing in the local property market.
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK