ALTHOUGH the residential property market is in the doldrums, now may be a good time for investors - who have the means - to buy residential property off plan, say property pundits.

The supply of new residential property stock has all but stopped because higher interest rates have caused demand to drop and this imminent shortage implies that residential values are going to start increasing again over the next 12 to 18 months.

Chris Renecle, MD of Johannesburg-based developer Renprop, says when an investor buys an off-plan unit there is a 12- to 18-month waiting period before he takes transfer of the unit and starts making bond repayments.

Renecle says prospects are good that the economy would have started improving and interest rates decreasing by the time that happens.

Investors who buy off plan do not pay for the unit immediately and instead pay a securing deposit of anything between R20000 and R30000.

"We are around the peak of the interest rate cycle. We are also in a period of rapidly rising residential rentals and this is because supply of residential investment town houses has all but stopped.

"The reason is the market of the past year where demand dried up because of higher interest rates and a relatively favourable stock market," he says.

Now the situation is starting to turn around with the stock exchange in a downward cycle and the residential property market near its lowest level of the cycle.

"During the period of construction and before you take transfer, most economists anticipate a declining interest rate environment and a continued increase in rentals. That, coupled with building inflation which remains high because of the capital infrastructure projects being undertaken by the state, means that you are purchasing at today's price and getting the advantage of inflation growth," says Renecle.

Provided an investor can afford a securing deposit and obtain a bond approval at the current high interest rates, by the time he takes transfer of his unit, he will have seen a reduction of interest rates, an increase in rental income and an increase in capital values, he says.

As far as existing properties are concerned, Renecle says there has been a "lot of hype about people being able to get bargains".

"We are not seeing that people are getting bargains. But for existing properties as well, it is always good to purchase at the bottom end of the cycle."

Samuel Seeff, chairman of real estate group Seeff Properties, says whether it is a new or existing property, providing it is correctly priced, now is a good time to be buying.

"I think for the guys who are looking for a long-term portfolio there has not been a better time for a long while than the present to find sellers under stress and be able to make a good acquisition.

"It is a known fact that a number of strategic purchases take place in this particular market where you have buyers dominating in the negotiation stakes who are able to walk away unless the deal suits them."

He says buyers are comfortable in the knowledge that there is plenty on offer whether it is a new development or existing home.

"Those looking to buy up or upgrade should be looking to do so in this market, as well," says Seeff.

KwaZulu-Natal property developer eLan Group says buying land off plan is better than a traditional property purchase "especially if one is looking for quick capital appreciation".

"It is a low risk investment provided you have done your homework, you know the future demand for the area and you have confidence in the developer," says eLan marketing manager Melanie Clarkson.

She says there are no transfer duties in buying off plan. Clarkson says all an investor needs to do is pay a deposit and secure a bond.