Real Estate Investor Magazine South Africa June 2018 | Page 8

Q&A Property Advice Q A ERWIN RODE CEO of Rode & Associates How are the different property sectors performing in the country’s major metros and their CBDs? The South African property market ended 2017 on a better footing, with industrial property and flat rentals managing to outpace inflation. The va- cancy rates for these two property types are considered fairly low. The same can’t be said about office and retail property. The office market continues to struggle under a significant oversupply. In 2017 Q4, nominal market rentals in Johannesburg de- centralized performed the best of the major cities, growing by 5%. Rental growth in Cape Town (+2%) and Durban (+1%) continued to be slow, while Pretoria recorded its first decline since 2011. Industrial property rentals managed to beat building-cost inflation in Q4, with a solid performance from most major industrial areas, where vacancy rates generally are low. Vacancy rates in other industrial areas, such as Pre- toria, Port Elizabeth and Nelspruit, averaged comparatively higher between 10% and 20%. During Q4, nominal flat rentals in Durban grew at double digits, the best performance of all major cities for the third consecutive quarter. This was followed by Pretoria (+8%) and Cape Town (+6%). Johannesburg’s rental rate grew slowly, while at the same time its vacancy rate moved into double digits. Nationally, house prices gradually accelerated throughout 2017, with nominal growth peaking at 4,9% in the fourth quarter, before slowing again in early 2018. For now, Cape Town remains the only major city, and KwaZulu-Natal the only province, where house prices are beating inflation. Q I’m looking to buy a property, but am worried about being able to put down a deposit. What are some tips you can give on this? A PAUL STEVENS CEO of Just Property ASK THE EXPERTS 6 Let’s take a round number as an example. On a R1-million property, you’re likely to need to put down a 10% deposit of R100 000. Saving R100 000 over two years gives you a R50 000 target per year. Aim for R4 500 a month, as some months you’ll come in a bit above, and some months a bit below. Does finding an extra R4 500 sound difficult when you still have to cover living expenses? The trick is to keep telling yourself that it’s just for two years. The short-term sacrifices will be worth it. Here are some easy-to-follow tips that can make the saving process easier. What do you absolutely love? Choose three little luxuries, and at the beginning of the month buy those. For everything else, compare prices and buy the cheapest. When you get paid, save first. Aiming to save what’s left over is not as efficient. Also put any bonuses, gifts or commission into your savings account. When choosing which property to buy, look for something you can easily afford. Look for homes that offer letting opportunities. If there’s a room or a granny flat that can be rented out, that income can be added in to the bond repayments and reduce the time it takes to pay off the bond. Do you have a property question you would like answered by our experts? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] JUNE/JULY 2018 SA Real Estate Investor Magazine