South Africa has experienced its fourth major interest rate cut this year, with the lowest borrowing costs the country has seen in almost 50 years, as the prime lending rate goes from 7.75% to 7.25%. As the Reserve Bank heeds the challenge to help give some economic relief and recover from the COVID-19 pandemic, investors are left puzzling on where they should invest their money.
“There is no doubt retiree’s savings, and seasoned investors with money sitting in an interest-bearing account, are taking a knock as they are getting less return on money in the bank. The current climate and entire Covid-19 experience has, however, highlighted how property remains a steady, first-choice asset class and how the conditions for investing in strategically located property has never been more favourable,” explains Stefan Botha, Director of Rainmaker Marketing.
“We can expect to see many potential home buyers possibly looking within higher price brackets for properties based on their monthly repayment costs being lower. In our opinion, the entry-level market demand will surge with investors. Someone purchasing a property now for R1 Million will save approximately R1600 per month based on the recent rate cuts. Strategically located areas will always experience steady capital appreciation growth over time, and additionally generate greater ‘cash-in-hand’ rental yields,” shares Botha.
One of Rainmaker Marketing’s recent Property Webinars, focused on Property Investing 101, identified upcoming and in-demand locations as one of the overriding factors where property purchasers will always see their property value grow. Additionally, property under R2 million is seen as the ‘sweet spot’ where investors can maximise their rental returns.
“The KwaZulu-Natal’s North Coast is one of those sought-after and strategically located areas. We expect to see a further rise in “semigration” numbers as investors and homeowners from Gauteng use this window of opportunity to secure their foothold in the KZN North Coast property ladder,” ends Botha.