Benefits of owning property
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Gain a foothold in property ladders
Benefits of owning property
South African interest rates are at a record low and first-time buyers have the strongest appetite to gain a foothold on the property ladder by owning their own homes. With this arises an obvious question from aspirant home owners, of‘ whether residential property makes for a sound investment or not?’
Globally, many fortunes have been made through investment in property throughout the ages and today’ s tighter market conditions present an ideal opportunity to acquire residential property at reasonable prices, often well below their actual replacement costs.
Owning a Residential Property It is widely acknowledged that owning your own home has constantly proven to be a sound medium to long term investment and remains so. This, despite the fact that there may be some valleys and peaks in the capital growth of the property along the way, depending on economic trends, the desirability of the property and its location. A further advantage is that you will immediately be able to start enjoying all the lifestyle and other benefits of owning your own home. You will have the luxury of making improvements to your home over time which will further add to the value of your property.
Benefits of Property Investment
Returns Property investment offers two types of returns – capital, which is derived from property price growth, and income, also known as yield, which is derived from rental income. When choosing a property, it is important to decide on which type of return you are seeking to prioritise. Properties suited best for capital growth may sometimes cost more and offer a lower yield while properties suited better to maximise on yield may cost less and offer lower capital growth prospects.
Location Property is also one of the few asset classes against which one can leverage and borrow, which is especially beneficial in these times of low interest rates. Bear in mind that its only logical that location plays a major role in the buying decision, particularly from an investment perspective. The fact that the smallest, average property in a sought-after area is likely to increase in value at the same
24 MARCH 2021 SA Real Estate Investor Magazine