BUILDING WEALTH THROUGH REAL ESTATE
Category Regional News
From the desk of Peter Gilmour, Chairman RE/MAX SA –
Many may think that the current real estate market would not be the ideal environment in which to build a thriving property portfolio, however, what better time to get into the market than when house prices and interest rates are low?
Looking back over the last 25 years we see that the property market has always followed a fairly predictable cyclical pattern of boom and bust periods. Based on this evidence, it inevitable that a boom period will follow on from where we see ourselves now.
That said, once the market changes and we begin to see a greater demand for property, we will also see a marked increase in the property prices. While many buyers may shy away from property investment during recession periods, these are the periods where they will get the most value for their money and be able to build up a property portfolio for far less than they could at the height of a boom.
This is because investors seem to look at property differently to other investments. When it comes to buying shares on the stock market investors will buy when stocks are at their lowest price and when there is perhaps less demand for that stock, yet this is not how they seem to look at property.
The opportunities that investors take advantage of now will benefit them during the next boom period, much like during the great depression and time the followed, which was 75 years of straight real estate appreciation in the US.
Those investors who had the foresight to buy property while the market was still recovering saw good return on their investment once the market had reached the point of full recovery and was flourishing. Property investment will always remain a sound option over the long term.
The last boom period was largely based on buyers taking out credit they couldn’t afford and living above their means, the recession forced many consumers to tighten their belts and reduce their debt, which is very positive for the economy in the future.
With less debt, more and more buyers have been able to put down larger cash deposits when purchasing property. As more buyers begin to show affordability, the emerging property market will have a stronger foundation. With the correct lending policies in place and consumers living within their means, the property market can once again begin to grow and thrive.
With the certainty of a boom period to follow, investors can enter the market with confidence and take the opportunities that are presenting themselves. The secret to building wealth through real estate is no secret at all. See property as a long term investment, if possible hang onto property or buy during the lows and sell during the highs.