Real estate remains a preferred investment option for many due to its reputation for stability, but prospective buyers must exercise caution. Following the South African Reserve Bank’s November 2024 decision to reduce the repo rate to 7.75% and the prime lending rate to 11.25%, buyers are optimistic about market relief after years of high borrowing costs. Despite this, property investment carries risks if critical factors are overlooked.

Arnold Maritz of Lew Geffen Sotheby’s International Realty highlights eight major red flags in property purchases. Structural issues, such as foundation cracks or sagging roofs, can escalate into costly repairs, making professional inspections essential. Water damage and poor drainage, indicated by musty odours or ceiling stains, may signal mould or structural deterioration, which are both expensive and hazardous.

Location is a vital consideration. Properties in high-crime areas or near disruptive elements may lose value or prove hard to resell, while desirable neighbourhoods with strong infrastructure and amenities typically offer better investment returns. Older homes with outdated wiring or asbestos pose safety risks and may require significant updates.

Neglected properties, with visible issues like peeling paint or broken fixtures, often conceal deeper maintenance problems stemming from financial constraints of previous owners. Overpricing and unapproved renovations further complicate investments, reducing equity and risking compliance issues.

While the interest rate cut has created optimism, experts advise buyers to proceed with caution. Thorough due diligence, financial assessments, and a clear understanding of risks remain critical for long-term success in property investment.