Question:
I own a ground floor flat in Main Road, Ferndale, Randburg. It consists of two bedrooms, one bathroom, a large store-room, a lounge or dining room, kitchen and a private garden. The flat is 88m² and the lock-up garage is 14m². There is also a communal pool.

The complex is of clinker brick and very well maintained. The purchase price in December 2004 was R410 000.

The current levy is R733 per month and I receive a monthly rental of R4400. The flat is bonded for R225 000 and repayments are R2256 per month at a currently subsidized interest rate of 12 percent.

As I am considering selling the unit at the end of the year, what would your suggestion be?

Answer:
I do not know what your entire financial standing is and the reasons behind you wanting to sell. Based on the limited information I have I would hang on to the property, because the market is weak at the moment.

What works in your favour is that the income from the property is covering the monthly repayment.

While you may be able to do better with investment capital at the moment (interest rates are favourable for investors) you may negate this by getting a lower price on your property. If you don’t need the money you should wait until the interest rate situation has stabilised and buyers are more confident about purchasing.

Buyers are taking advantage of the high interest rates and making very low offers. A colleague of mine just bought a property in Fourways for R880 000 — fully furnished. The seller bought the property for R960 000 a year ago while similar units were on the market for R1.1-million. The seller had to pay in to get out of the deal with the bank.

Agents are saying they have seen a 20 percent drop in property prices and the market is being flooded with properties that individuals originally bought in the 'buy to rent' boom three to four years ago.

There has been a huge increase in repossessions in that last six months and the people who are handing back their homes have to live somewhere, so rental properties will start to look more attractive especially in your price range.