Window Now Open for Serious Property Investors
The tight conditions in the property market at the moment represent some excellent opportunities for investors with a medium- to long-term outlook.
Davel says investors who are focused on long-term capital gains as well as rental streams stand to do better if they make careful and selective purchases now, than if they wait for the market to cycle upwards again.
This is according to Jan Davel, MD of the RealNet estate agency group, who says all indications are that there will be a resumption of stronger value growth in the market within the next two to three years.
“In the meantime, buyers and investors who are intent on increasing their property portfolios will have a definite advantage if they make the most of the current lull.”
He says higher interest rates are already making it more difficult for many prospective buyers to secure a bond, and this - added to slower economic growth - spells a drop in sales that favours investors, as it tends to make sellers more willing to negotiate price.
“In addition, there will be more owners who find it difficult to keep up their mortgage payments and wish to sell quickly to relieve the financial pressure on their households, or in order to avoid foreclosure,” says Davel.
However, he says those who are investing at the moment should not be looking for short-term gains.
“This is not a speculators’ market. Current investors should have the patience and resources to wait at least until the next upturn and, more importantly, to carry most of their bond and property operating costs themselves if necessary,” says Davel.
“The reason is that although rental properties are currently in high demand, actual rentals are unlikely to rise much over the next two to three years. Landlords who have found quality tenants will not want to risk losing them by raising rents too much when they know they are also struggling with higher food, transport and utility costs.”
Nevertheless, he says investors who are focused on long-term capital gains as well as rental streams stand to do better if they make careful and selective purchases now, than if they wait for the market to cycle upwards again.