Our buying/investing decisions are normally influenced by how the markets are looking, and in property investing, this should not be the case
Over the last century, property values have gone up and down but have pretty much kept ahead of inflation. The simple explanation is that demand for housing is growing in line with our population, and expansion of the economy (GDP).
New homes are built when the cost of construction and land is cheaper than what second-hand houses are selling for. If demand exceeds supply, prices rise above inflation and developers, speculators, bakkie builders, slum lords, and the like spring into action. Supply of new houses floods the market in the categories where the price differential is the largest until there is oversupply. Then, the price deflates till the creators of new homes go back into hibernation.
When buying, consider what would it cost you to build a similar home, including the land and all fees in your chosen area. If the second-hand house is cheaper or has far better value for money, then you are probably on the right path and the house prices are running below inflation. So, there is a high probability that the price will increase in the future to correct.
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