{"id":622265,"date":"2022-09-02T17:00:06","date_gmt":"2022-09-02T15:00:06","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=622265"},"modified":"2022-09-02T15:32:19","modified_gmt":"2022-09-02T13:32:19","slug":"heres-what-r45-million-buys-you-in-cape-town-vs-pretoria-vs-joburg-vs-durban","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/622265\/heres-what-r45-million-buys-you-in-cape-town-vs-pretoria-vs-joburg-vs-durban\/","title":{"rendered":"Here’s what R45 million buys you in Cape Town vs Pretoria vs Joburg vs Durban"},"content":{"rendered":"

Property professionals real estate group Just Property discuss how to view property as an asset class in the current investment climate, and the outlook for the sector.<\/p>\n

The repo rate is set by the Reserve Bank’s Monetary Policy Committee and is the rate at which it lends money to the country’s commercial banks. South Africa\u2019s repo rate is currently 5.5% and \u201caggressive hikes can be expected during the rest of the year\u201d according to PayProp\u2019s latest Rental Index Report.<\/p>\n

\u201cThe decision to hike the repo rate by 0.75% recently, while uncomfortable, will help guide inflation back towards the midpoint – between 3% and 6% – of the target band so that we can expect to see lower interest rates in the future,\u201d said Carl Coetzee, CEO of BetterBond.<\/p>\n

Is property still a good investment right now?<\/strong><\/p>\n

\u201cProperty investment is still the most reliable way to generate income over the long term,\u201d said Yolanda Cornelius of Just Property Zululand and Dolphin Coast. \u201cIf you are an investor, it is best to invest in a property that will produce rental income year-round. Just make sure you understand all the costs associated with legal fees and are prepared for unexpected costs.\u201d<\/p>\n

Of course, if you buy the wrong type of property at the wrong time or in the wrong area, it would be a bad investment, but with the right advice, even inexperienced buyers can get it right, noted Shaun Dubois, Just Property Choice: \u201cThe wealth that property investing can generate over time is phenomenal.\u201d<\/p>\n

To fix or not to fix your interest rate<\/strong><\/p>\n

Given the broad market opinion that interest rates will keep climbing and that we\u2019re entering a prolonged period of inflation, could you use a long-term bond, fixed at the current rates as a hedge against inflation? While that is being suggested in some economies, like the US, it\u2019s not necessarily a good idea for South Africans. Those who apply for a fixed-rate bond should be aware of the constraints.<\/p>\n

\u201cThe value of your property depends on market growth, so there isn\u2019t a simple answer when it comes to evaluating the benefits of a fixed interest rate versus a variable interest rate that fluctuates in line with the repo rate,\u201d said Coetzee. \u201cEach buyer\u2019s financial situation and circumstances are unique, and it depends on the state of the market and house price inflation.\u201d<\/p>\n

Only once the bond is registered can one apply for a fixed interest rate within a strict time limit attached before the offer lapses. The fixed-rate offer on a bond is usually considerably higher than the variable rate as it poses more of a risk to the bank.<\/p>\n

\u201cIt\u2019s also worth remembering that fixed interest rates are set for up to a maximum of five years. That means that on a longer-term loan you would need to renegotiate the terms after five years, if not sooner, and you could very well find that the new terms are less favourable than they were before,\u201d he warned.<\/p>\n

How long should one hold on to property?<\/strong><\/p>\n

Knowing when to sell a property can be a difficult decision for any investor. \u201cThere\u2019s an old saying: Don’t wait to buy real estate; buy real estate and wait,\u201d said Dubois. \u201cProperty should seldom be sold. If you purchase wisely, there should be little reason ever to sell.\u201d<\/p>\n

\u201cTry to hold onto a property for at least four to five years. This time frame is su\ufb03cient to show healthy appreciation – the level of appreciation will help you evaluate the property\u2019s future potential performance,” said Cornelius.<\/p>\n

One investment that has proven to outperform in\ufb02ation in the South African property market is cleverly selected buy-to-let property, said Cornelius. \u201cFirstly, while experiencing short-term \ufb02uctuations, property price growth continues to keep pace with in\ufb02ation over the long-term. In fact, it is widely recognised that in\ufb02ation boosts physical asset prices like gold, silver, oil and property.<\/p>\n

\u201cWith recent trends, I would be leaning more towards affordable sectional title units than commercial,\u201d said Dubois. \u201cFlipping\u201d can be lucrative if you can purchase a residential house that you can convert to commercial zoning; otherwise, he sees little opportunity, \u201cthough some individuals have succeeded\u201d, he concedes.<\/p>\n

What a growth property looks like<\/strong><\/p>\n

BusinessTech looked at properties featured by Pam Golding in the country’s major metros that have attracted strong growth, likely due to their location, and luxury, now on sale for around R45 million.<\/p>\n

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Durban<\/strong><\/p>\n