Be smart and buy this summer

You make money when you buy property, not when you sell it - and this will be the summer when shrewd property investors make money.

That's the confident prediction of Berry Everitt, MD of the Chas Everitt International property group, who says that with property prices predicted to rise between 50 and 60 percent over the next three years, it will be those that buy now who reap the highest rewards.

"It is contra-intuitive to buy now, when the property market is in a downturn, but there is another old adage that says you should sell when everyone else is buying and buy when everyone else is selling if you really want to make good returns on your investments.

"And we believe this summer will be the season when the best buying opportunities present themselves. After this, prices are going to start rising faster again and the long-term returns on property investments will be relatively smaller."

Currently, he notes, price growth has slowed almost to a halt while interest rates appear to have peaked, and there are many sellers eager to conclude deals before the end of the year. "But there is already increasing demand as indicated by rising sale activity since August and this will intensify when interest rates start to fall next year.

"At that point stock levels will really start to drop and prices will start to rise, which means that there is a window of opportunity to negotiate the best deals of just a few months. Looking back in three years' time, investors will recognize this as the turning point of the market "

For those who intend taking advantage of this opportunity, Everitt says, the best buys are likely to be in the medium-price, medium-size sector of the market, where price growth is currently at its lowest ebb and the high number of homes for sale make it possible to secure excellent value for money.

"Such homes are also likely to experience the highest level of demand when the economy turns and many middle-class families who are currently 'making do' in rented accommodation or smaller homes can once again qualify for home loans and start looking for homes of their own or upgrades. It is important to remember that the middle class in SA is growing rapidly, with at least 2m people having been added since 2005, and the spending power of 'black diamonds' now equaling that of whites at R250bn a year."

Issued by Chas Everitt International

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