Go where the Banks Go

I always find it interesting to talk to people involved in real estate and enjoy the fact that the more views one gets from different perspectives within the profession, the more holistic ones understanding of the market becomes. Almost every week I travel nationwide, and recently I was in Braamfontein chatting to agents from a prominent real estate brand.

The conversation, as it often does, turned to investment opportunities, with the agents discussing the particularly high yields on buy-to-let sectional title property in Braamfontein (brought about in no small measure by the high demand for student accommodation in the area). They also complained that notwithstanding the high ROI, the banks were reluctant to fund investment there at a level more than that of a 50% loan to value.

A short while later we had the unedifying spectacle of students rioting, vandalising and looting in the streets of Braamfontein during protests for free education. Hardly a stimulant to growth of property prices in that neighbourhood! No wonder then the banks were reticent about lending there – they clearly had a far more conservative view than the agents.

I was interested to read Chris Tyson’s of Tyson Properties recent views on the matter – the title for his release I have borrowed for this blog “Go where the Banks Go”! (and perhaps a cautionary “don’t go where the banks won’t”). I’d like to share Chris’ words:

“Now is a good time to buy property, says Tyson. He shines the spotlight on areas like the Cape Town City Bowl, Fourways in Johannesburg and in KZN, from Umhlanga to Ballito. Property prices have increased marginally over the past year, and we expect them to do the same in 2017, after considerably slow growth in 2016.

That said, we do not forecast a price increase of more than 10% in 2017. Naturally, there are areas that have out-performed others, particularly in Cape Town. Buyers must always remember that property is a long-term investment.”

Tyson sheds light on the perception that overseas buyers are dominating the property market along the Atlantic Seaboard. It turns out that less than 2% of all property transactions are recorded for foreign buyers. “Most of the sales are actually to buyers from Johannesburg and Durban.”

Tyson advises buyers to follow the bank’s lending criteria. “The areas in which banks lend more easily are really the hotspots for investment in South Africa. This includes Umhlanga and Ballito in KZN, Cape Town’s Atlantic Seaboard, and upmarket areas, like Bryanston, in Johannesburg. If I was buying property in 2017, those are the areas I would look at,” he concludes.