Looking back at the first three months of 2024, we see South African shares as well as shares listed in Hong Kong still trading in the red. The rest of the world’s major indices are all positive. The rand is very stable and trading at around R18.80 to the dollar, which is only around 3% weaker year to date. Looking at Gold, we see a very strong performance with a return of 9% year to date. Another top performer over the last few months has been Bitcoin with a return of 62% for the three months. It seems like inflation is not going away any time soon. The U.S. economy is very strong and as long as that is the case interest rates will remain high, which will not benefit shares and bonds over the shorter term. The outlook for the longer term remains positive and investors should remain patient, put new funds to work and not try to time the market.
South Africans are used to buying property instead of renting it. There will always be a debate about which one is better but if we look at the performance of residential property over the last 16 years or so, we see the following:
It is clear that the average residential property has not performed well, especially in dollar terms. But if you look at the property prices in some areas in the Western Cape, you will realize that location plays a very big role. Property is a cyclical asset class and interest rates will impact the affordability of property.
For most people owning their own home is more than just a financial asset, it is also an emotional asset. At the end of the day it is fair to say that the choice between owning and renting is a very personal one and what seems wasteful to some, looks perfectly justified to others.
