The best areas to invest in property in SA

Article summary

• Coastal areas should be a primary target as more South Africans embrace living in remote areas and working from home.
• The demand for affordable housing makes suburbs that offer affordability and convenience a sound investment.
• Lowering your interest rates will increase your profit on your investment.

Although interest rate hikes have been predicted for the coming year, the South African property market remains in a good space.

In fact, the property market was surprisingly active during the pandemic period as people looked to upgrade to larger houses that fit the work-from-home lifestyle; and increased competition between banks has resulted in a higher home loan approval rate.

So it’s a good time to invest in property, but you need to know which areas make for financially sound investments; and to know that, you have to understand the trends currently taking place within the South African property market.

1. Semi migration to coastal areas

It’s not just retirees seeking to migrate to coastal areas now. Young families are looking for a more relaxed lifestyle too, as are young professionals who have embraced the work-from-home lifestyle.

The pandemic made a lot of people realise how easy it is to work from home in this digital age. We expect this trend to continue well into the post-pandemic era.

Naturally this makes the Western Cape, with its abundance of natural beauty, an attractive destination. A large portion of semi migration in South Africa has been to the Western Cape.

Small castal towns near Cape Town should be a prime investment target. These include:

• Hermanus
• Onrus
• Langebaan
• St Helena

Towns in the Garden Route are also experiencing a singificant influx:

• George
• Mossel Bay
• Plettenberg Bay (which experienced a record influx in 2020)

The Eastern Cape is also proving a popular destination, in particular areas such as:

• Jeffrey’s Bay
• St Francis Bay
• Port Elizabeth

Kwazulu Natal is also a prospect, with seaside towns such as Ballito offering quiet coastal living and close proximity to Durban.

2. Demand for affordable housing

A shortage of affordable housing is the other defining feature of the SA property market.

Little to no growth is predicted for luxury housing in high-end suburbs, but affordable housing is in high demand, with the FLISP program that subsidises first-time home buyers being a significant contributor to this.

Businesstech reports that the average selling price of properties registered in the Deeds Office is R990 000, and 50% of renters are in the R7 000 to R12 000 bracket.

Cape Town, Johannesburg and Durban are the three cities holding the majority of the country’s population between them so property investlors should be targeting affordable suburbs in these cities.

Cape Town was named the 6th most affordable city to relocate to in the world by money.co.uk. The Southern suburbs and Northern suburbs offer an appealing mix of quiet living and affordable properties.

In Durban; the suburbs of Reservoir Hills, North Beach and Avoca have price ranges that match up to the average purchase price of properties in South Africa (R1 407 071).

In Johannesburg, areas that offer an average asking price of under R1 000 000 include Ferndale, Northwold, Winchester Hills and Witpoortjie. They all offer comfortable living and convenient access to necessary facilities.

Give yourself the best chance of making a profit on your investment

Lowering your interest rates means increasing your profits, and the best way to achieve this is to employ a home loan comparison service such as ooba Home Loans.

We submit your home loan application to multiple banks, so you can compare deals and choose the best one on offer.

We also offer a range of tools that can make the home buying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.