Stock market woes could boost property

Stock market woes could boost property

The global stock market meltdown and worldwide banking failures are likely to spur renewed interest in the safety of bricks and mortar.

Rhys Dyer, chief executive of ooba (formerly MortgageSA), said today that recent events are likely to lead investors to re-look at property as a safe haven investment after losing confidence in shares and banks.

"The property market is compelling right now as investors will feel more secure having their money in a tangible asset with underlying inherent value in the land, and which they control directly," says Dyer.

House prices in South Africa have been relatively flat and in some cases fallen in the past year. Rental yields have risen from greater demand for rental property as buyers have been unable to raise finance.

Dyer said that the stock market meltdowns are likely to underpin the case for property as investors are comparing it to riskier paper investments.

"Cash buyers will be in a particularly strong position to snap up properties because of the bargaining power cash has. But other investors will also seek the relative safety of property investment."

Dyer noted that this trend will initially be led by existing investors who have the experience to cope with the current market conditions.

"With property, you can feel it, touch it and see it and you know it cannot be taken from you. With a worldwide recession looming, equity markets are unlikely to perform for the next few years so investors will inevitably be switching some money from equities into property", says Dyer.

The latest 'oobarometer' price index showed that average house prices have risen 3.4% in the month of September 2008, year on year.

The oobarometer also found that the average purchase price in September jumped 2.4% from August 2008 bringing the price rise since July 2008 to 1.6%.

Hello ooba news

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