We have been in the buyers’ market for over two years now, since the start of the COVID-19 pandemic.
Some of the lowest interest rates for more than 40 years have resulted in a good demand across the board.
Interest rates are still so low that in most cases it is cheaper to buy than rent, certainly in the short to medium term.
What was really interesting was what happened when one large property owner decided to liquidate his Bloemfontein holding of flats and townhouses.
Usually when a large number of units come onto the market it depresses the market and it takes a long time for all the units to be sold.
In this case about 50 properties were made available, including Bains Game Lodge and Nottinghill plus another modern building in Navalsig.
The tenants jumped at the chance to buy, not only tenants living in the units but also other tenants living in the buildings.
Owners also showed real interest in buying extra units.
I found this quite interesting.
While low interest rates are a real motivating factor, the potential for inflation also helps.
While bond rates will rise, it is still not expected that they will be more than one percent or so higher at the end of the year.
But it is highly likely that rental rates will firm substantially now because students are back in class and the vacancy factor has reduced to near zero levels.
Apart from that, there has been very little development of new units over the past two to three years resulting in a real shortage of larger and better quality flats and apartments.
These factors are likely to see a larger than normal upward movement in the rentals of all types of flats and townhouses.
Buying your own flat to stay in rather than renting one really does make more sense, especially now given the low interest rates.
- Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.