With stock markets as volatile as they are and GDP forecasts looking gloomier than ever, many investors are reevaluating the safety of their investment decisions, justifiably so. And, while property price growth is also slower than usual, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, reassures investors that their money is safe in the property market.
“Real estate is, and always will be, one of the highest yielding long-term investments. Having lived through the market crash in 2008, I have witnessed how the market corrects itself over time. I fully believe that the housing market will do the same once we emerge from this lockdown and reach an end to this pandemic,” he states.
To provide an example of the kind of long-term recovery homeowners can expect, Goslett references Lightstone Property statistics on a R1.6 million property purchased as a primary residence in Claremont in 2010 that is now worth R3.5 million. By comparison, if you had invested the R1.6 million into a money market at a 10% interest rate for ten years, the value of the fund would amount to R3.38 million after tax.
“If you look at the statistics on house price growth over time, you will notice that, in virtually every instance, the homeowner will stand to make a substantial profit off the sale of their property if they choose to sell after at around the ten year mark or later. This is because the ebbs and flows of the market, however extreme they might be, even out over time to yield a more stable and substantial return,” explains Goslett.
Goslett therefore reassures investors that their money is safe if they have invested in property – particularly if they have chosen to do so over this time. “Real estate investors stand to make substantial gains by investing in real estate now while house price growth is slow and interest rates are at an all time low. If you are having doubts, just ask anyone who purchased real estate back in 2008 what they paid for their property then and what the property is worth now,” Goslett concludes.