Switching from property to shares ?

Parkvillage Shingalana 2024 Leaderboard 970x90

Switching from property to shares ?

Listed Property, REIT, Real Estate Funds

Posted On Friday, 28 May 2004 02:00 Published by eProperty News

font size decrease font size increase font size
Print
Email

Rate this item

(0 votes)

With reports coming through now almost daily on the improved performance of the JSE Securities Exchange, would now be a good time to switch your investment from property to shares?

Bill Rawson, chairman of Rawson Properties, says most people who put this question to him do so because they fear that the property boom will come to an end.

"In my experience, however, JSE bull runs are usually followed about six months later by property bull runs," Rawson said. "We are now hearing a great deal about a possible decline in the US economy, a rise in the oil prices and a 1.5% to 3% hike in the South African interest rates before the end of this year. All of these, no doubt, are possible and obviously they will affect the investment and property market.

"Nevertheless, my investigations have reassured me that the demand for Cape property is still so strong that I cannot see property prices falling off. There may well be a slow down later this year in price escalations - but not, I am convinced, any sort of fall off. Demand for property is still far too strong." The South African home buyer, said Rawson, is in the strong position of probably being able to cope with higher home prices because, unlike their UK, European and Australian counterparts, he currently pays a far smaller proportion of his income on his home - and his household debt, unlike that of some many first world citizens, is usually not excessive.

"The Absa survey shows that South African families on the whole are far less in debt than their first world colleagues, particularly the Americans. In the US today personal and family debt is all too often as out of line as their national debt." Family and household debt in the US today, said Rawson, are up to three times the annual income of the wage earners. By contrast, he said, South African debt is around 30% to 50% of the annual income. The Absa survey, he said, also showed that South African home prices in real terms are inexpensive compared to those of the first world.

Rawson recalled that in the 1970s he was able to tell buyers with complete sincerity that R35 000 would buy them "a very good home" in Cape Town's Southern Suburbs. Today, he said, the figure that would have to be quoted would probably be around R5 million. "In my 30 years in property, I have seen people sell off their property investments for other purposes - often to invest in a business where the returns, it is thought, will be higher. Too often their expectations were never met.

"At Rawsons we try to advise young people to get a foothold in property, not only for themselves and their families but also for investment purposes. In this way they can build a nest egg of rented properties which will support them in their retirement." For further information please contact Bill Rawson on 021 657 3500.

This article was originally published on page 10 of The Cape Argus on May 29, 2004
Publisher: The Argus
Source: The Argus

eProperty News

Latest from eProperty News

More in this category: Retail bond sells R2m via internet on first day 'SA is a competitive R&D location'