Is it the right time to invest in the residential buy-to-let market in South Africa

This seems to be the question I get asked most frequently.
Stock markets are making losses with exception of Resource stocks which in themselves are volatile.

My view, since I began investing in residential property as my preferred asset class, was that residential property could give the average man in the street the opportunity to secure his or her financial future.

So back to the question, as with most investments property is also cyclical.

My assessment of the current residential market, is based on a number of observations and discussions with industry player from Estate agents to Bond Originators to Investors.

The impact of the NCA on credit exposure plus higher interest rates is resulting in three factors:

1) People who own there own property cannot afford to pay their bonds are looking to be bailed out. There is therefore an opportunity to pick up these properties below market value and to secure the current owner as a tenant.
2) Buy-to-let investors that have attended seminars over the last few years have now over extended themselves, and cannot obtain re-financing to cover their shortfalls. This also offers new investors or those that have been more cautious, the opportunity to pick up properties that are being offloaded at below market values.
3) People who have over extended themselves with credit are experiencing repossessions and resulting credit blacklisting. This means they will struggle to gain approval to obtain bond finance for about 10 years. This means these people will have to rent.

In addition, my company Rent-Smart is seeing a rise in demand for rentals and annual increases averaging 10%.

So in my view the answer is yes.

Click Here for another view that I read last week.


You make up your mind!


Cheers,
Russell.