The property market may have lost some of its lustre at present, as market conditions continue along a fairly bearish phase of the cycle.   However, that doesn’t mean there aren’t opportunities for investors to boost their portfolio with sound purchases, or even to enter the property investment market for the first time.  Pam Golding Properties’ MD for the Western Cape metro region, Laurie Wener, says there are sound opportunities for those who are prepared to take a medium- to long-term view, and take into consideration the need to reduce risk factors.

“Property has long been favoured as a desirable asset, and a reliable vehicle for consistent and even excellent capital growth, in the medium- to long-term,” says Wener.  “Indeed, it is considered a measure of wealth and power in the first world, and thought by many to be the leading vehicle for the accumulation of true wealth.  It can also be an excellent hedge against currency devaluation and inflation – particularly relevant factors in South Africa when one takes a long-term historical view.  Share markets and other investments may fluctuate quite suddenly, but the residential property market tends to be somewhat less volatile, allowing investors to anticipate oncoming trends and react accordingly.”

Unlike other investments where buyers can start off slowly with small sums of cash, property requires a relatively large initial outlay, even for a small purchase.  If the investor does not have sufficient cash, this means taking out a mortgage loan.  “There is no need for buyers to be wary of mortgage repayments, if they do not over-extend themselves,” says Wener.  “If you purchase in a well-established area with consistently good rental demand, you are almost assured of regular monthly rental income, which may cover your mortgage loan repayment as well as rates and levies on the property, if you have geared correctly.  Of course, the higher the proportion of the loan required the more cash you will have to put in each month.  So it’s always preferable to put down as high a cash deposit upfront, as you can possibly manage.”

Another deterrent may be concerns about the possible loading of taxes on secondary or income-producing properties.  “Don’t let this put you off,” says Wener.  “These amounts, when considered over the long-term investment period, are small when compared to the capital growth you can achieve.  And in the case of rates and levies, these are deductible as an expense from any income you may generate from the property.”

The time frame of a property investment can also be viewed as a barrier – but Wener cautions buyers to keep focused on the medium- to long-term view.  “Yes, short-term speculation can be very lucrative and exciting,” she says.  “But the risk factor is so much higher.  This may well be attractive to those with an appetite for risk, and sufficient cash with which to play, plus some experience and good instincts.  But for the average property investor, it is far more sensible to take a longer-term view and achieve steady capital growth, than to try and make a quick killing.”