Put your year end bonus into your bond and save

SOUTH Africa’s trade deficit in August rose to a new high of R16,3 billion (as against R6,8 billion in July) and this was its highest level since January this year.

This caused the R/$ exchange rate to weaken further so that at the time of writing $1 cost approximately R11,21.

This and other recent economic data (including the fact that the third quarter was the worst on the Johannesburg Stock Exchange for three years), said Tony Clarke, managing director of the Rawson Property Group, have done much to diminish business confidence in South Africa and have reinforced the traditional perception that in a struggling economy such as ours there are few better classes to invest in than property.

Taken on a nationwide basis, he said, both residential and commercial property have over the last year seen a growth of 6 to 8% – “highly satisfactory in the circumstances”.

Clarke added that in certain high demand areas, the growth had been a great deal higher.

In the current difficult circumstances South Africans would be well advised to increase rather than cutback on the austerity measures that so many have recently found necessary because, “if one thing is certain, it is that there is no quick fix to the current problems and the 5% GDP growth rate, which government believes is still achievable, will not be seen for at least two years”.

One austerity measure, which many Rawson Property Group spokespeople have regularly advocated, is to put one’s entire Christmas bonus into whatever property bond one is paying.

This, said Clarke, could hurt and even cause distress, but in his experience, it was a worthwhile step to take because carried out over a period of a few years, it reinforced budget consciousness in all members of the family and helped significantly to reduce the ultimate payout by the property buyer.

“We have seen people reduce the final price paid on their home by 20 to 25% and the pay-off period cut from 20 to 15 years simply by adopting a few measures of this kind,” said Clarke.

“The plain truth is that for many salary earners the hardship caused by increasing their savings is not too severe.”