Generally, property appreciates about four to five percent a year. The appreciation figure normally varies from one area to another which makes it very important to choose a good suburb when buying property. Parklands remains a good performing suburb in Cape Town for buyers looking to buy between R500 000 to R2 million.
Five percent may seem like a small percent but it is not when you look at the value of R700 000.You could easily earn over the same return with a very safe investment in treasury bills or bonds.
Five percent may seem like a small percent but it is not when you look at the value of R700 000.You could easily earn over the same return with a very safe investment in treasury bills or bonds.
Now Take A Closer Look..
Presumably, if you bought a R500 000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of R50 000.
Looking at the appreciation rate of 5% yearly, a R500 000 home would increase in value R25 000 during the first year. That means you earned R25 000 with an investment of R50 000. Your yearly return on investment (ROI) would be a whopping 25% percent.
While you are making mortgage payments and paying property taxes, along with a couple of other costs, your investment grows faster than any other form of investment. However, since the interest on your bond and your property taxes are both tax deductible, the government is continuously subsidizing your home purchase.
Looking at the appreciation rate of 5% yearly, a R500 000 home would increase in value R25 000 during the first year. That means you earned R25 000 with an investment of R50 000. Your yearly return on investment (ROI) would be a whopping 25% percent.
While you are making mortgage payments and paying property taxes, along with a couple of other costs, your investment grows faster than any other form of investment. However, since the interest on your bond and your property taxes are both tax deductible, the government is continuously subsidizing your home purchase.
