South Africa's residential property outlook is looking decidedly more positive.

The latest rate cut brings South Africa's interest rates to the lowest they have been in 30 years. When one looks at the total effect of the recent round of rate cuts, property still remains one of the very best investments you can make.

Although the half percent rate cut is unlikely to fuel property sales in isolation, you need to look at the overall impact of the recent cuts and in this context, where your best medium to long term investment lies. Before the most recent round of rate cuts, the repayment on a bond of R600 000 at 15.5% was R8123 over 20 years. The repayment now at 10% is R5790, a massive reduction of 29% in your monthly bond repayments. On a bond of R1million at 15.5% the repayment was R13 539. Now at 10%, it's R9650.

Overall, South Africa's residential property outlook is looking decidedly more positive with a number of factors culminating to inject renewed confidence in the market and delivering a number of compelling reasons why property is still your best investment.

History has shown time and again that residential property always grows positively over the medium term and is far less volatile than other investments on the stock market. One of the key reasons for the stability in the residential property market is that a home is principally a basic necessity after food and clothing. And despite what the critics say, investing in a primary property makes very good financial sense, especially if it means not having to pay rent. And if you can afford it, investment real estate makes a huge amount of sense. It means ordinary investors can borrow money at low interest rates and, when purchased well, tenants can pay the interest while amortizing the bond and possibly even generating cash flow.

Granted that the property market has taken a battering of late and that the stringent lending criteria of banks and the National Credit Act have made the ride even tougher - there has been good and valid reason for it. In many instances, it has done a great deal of good in terms of cleaning out and returning stability to the market. However, the clean out should not render old-fashioned real estate investing for the medium to long-term a relic of the past. Property has been making people rich for a long time and it will continue to do so with the right elements in place.

Bruce Swain (Managing Director of the Leapfrog Property Group)