What a world we live in. There’s no telling what tomorrow will bring, or what the global “leaders” will decide to do next. That makes it hard to plan, and hard to know where it’s safe to invest your hard-earned wealth.
The only certainty is that there will be continued instability and uncertainty. So, let’s take that as a given.
What is the impact of that certainty? It means that any economic forecast or prediction is not something we can rely on. Just look at the forecast economic growth that experts made for South Africa and most other countries as recently as February this year. None of them are realistic today – not since the start of the conflict in Iran, the impact on the price of oil, and the knock-on effect it’s having on inflation, interest rates, food production, travel, exchange rates, and the list goes on.
Shortly after the conflict commenced gold and other precious metals felt the impact – some by as much as a 20% drop in value, almost overnight. Stock markets are volatile and it’s very much a gamble to know what to invest in.
“Gambling” with your wealth isn’t something that sits well with most of us.
So, where does that leave us when considering whether real estate is a safer bet.
Let’s look at the impact on real estate in our market since the start of the Iran conflict. There was no drastic decline in market values. People didn’t, suddenly, decide they don’t need to live in a home. Demand remained constant.
Buyer appetite remains high. What has changed, though, is buyer certainty when it comes to the cost of servicing debt when they purchase property. That’s not necessarily a bad thing. It shows maturity and sensibleness when someone considers the cost and factors in the very likely scenario that interest rates will increase in the short term.
Whilst there are no certainties today, there are likely scenarios. It’s hard to argue that the Iran conflict, even if it’s resolved soon, will have pushed up the cost of living. The usual counter to high inflation is increasing interest rates – and that seems the most likely scenario for the balance of the year.
The sooner the conflict ends, the shorter the upwards interest rate cycle will be. That’s something we all need to watch.
One of the most reassuring considerations when it comes to real estate, is that demand is very constant. There is no “overnight” loss of demand as people need somewhere to live. If buyer’s affordability is impacted and they decide to rent, then the Investor market looks even more attractive as rental demand grows.
So, whilst many other investment vehicles have shown considerable volatility over the past few months, real estate has been much more stable. Property values do fluctuate, that’s true – but a “crash” is very rare to see.
And, when one considers the volatility we’ve lived through in the last decade, the facts show that Real Estate has done exceptionally well – without the risks of other investments.
Not to mention, you can borrow money from the bank to acquire your real estate investment.
If you’re looking for a stable investment vehicle that has consistently performed well and weathered global crises, real estate is your best option. That is likely why we’re all familiar with the expression – “it’s as safe as houses”.
