Your Best Investment of 2017

Whilst the South African economy has come to terms with an uncertain 2016, a widespread feeling of positivity is slowly perpetuated through the country. The property market is routinely viewed as a safe bet, but there is one sector that stands head and shoulders above the rest. 

According to the FNB-TPN Residential Yield dataset, buy-to-let investors are expected to yield better-than-inflation income this year. This is due to the national average gross residential yield hitting 9.06% in Q3 2016.

An expert in the field is John Loose, FNB household sector strategist:

“After the Q2 2016 increase in the average yield, we believed that it could be the beginning of a longer gradual rising trend in yields, given the many fundamentals pointed towards it. Interest rates had risen gradually from early-2014 to early-2016, and a multi-year economic growth slowdown since around 2012 had exerted downward pressure on home buying demand”. 

Factors include the downward pressure on the growth of housing prices, and slower house price inflation (compared to rental inflation). This had led many to predict that the year ahead will provide more attractive buy-to-let buying opportunities. 

This expectancy for improved buy-to-let yields is apparent in the fact that year-on-year house price growth slowed from 4.6% in Q3 2016 to 1.9% in Q4 2016.

“That Q3 average house price growth was very similar to the StatsSA estimate of 4.88% year-on-year inflation in average residential rental payments late in 2016,” said Loos. “However, the 1.9% house price growth of Q4 is noticeably weaker than that rental inflation estimate”. 

Essentially, this implies rental inflation noticeably outpacing weak house price inflation. 

“We project house price growth for 2017 to average around 3%, down from 5% in 2016, in lagged response to the economic growth slowdown and interest rate hiking of recent years”. 

Smiths Property Group prides itself on marketing only the finest residential investments in KwaZulu-Natal. Besides the growing rental market within Cotswold Downs and St. John’s Village in Howick, the obvious choice would be visiting Emberton Estate (next to Augusta Estate). 

In partnership with the Collins Group, Emberton is expected to provide affordable family homes at the most convenient of locations. With quick access to highways and superb schooling, you cannot go wrong with this Development.