A press office feature released by FNB indicates that the risks to property have shifted from interest rates to economic growth and that consumers should heed this latest development. The FNB Property Barometer for the third quarter of 2008 was released on Monday and showed further weakening in levels of demand activity experienced by estate agents.
From a previous level of 4.4 on a scale of 1 to 10 in the second quarter, respondents to the survey indicated a further decline to an average level of activity recorded at 4.1, which is the lowest in the history of the barometer. The average length of time a property stays on the market has also increased from 14 weeks and 6 days to 20 weeks and 1 day in the most recent quarter.
Just 12% of the market comprised first time buyers, which is the lowest percentage on record, while sellers not obtaining their asking price increased from 85% in the previous quarter to 88%. The buy to let sector of the market is also relatively subdued, with a mere 13% of total buyers believed to be buy to let investors.
John Loos, FNB Home Loans Property Strategist, says that looking forward there have been some encouraging signs emerging, which reflect well on the future of the residential market. Most notably, the recent fall in oil prices, which has resulted in domestic fuel price cuts, as well as a softening in global food price inflation. FNB believes that the CPIX inflation rate may well be at its peak.
The onset of an expected decline in inflation would result in inflation having less of an impact on disposable income going forward, while interest rate cuts are anticipated from April 2009. The debt to disposable income ration in the household sector has also started to fall, which suggests that there is some improvement in the ability to service its debt burden.
However, in light of all the encouragement, Loos warns that consumers should not get too excited just yet. The current threat to global economic growth coming out of the US seems to be moving in to replace the previous risks. Loos says that it would be naïve to think that South Africa’s property market and financial sector are not exposed to the potential fallout from the US.
While the bailout plan is currently being implemented by the US government, it still remains to be seen as to how severely the recovery plan is regulated and how strict lending policies to households in the US become in a bid to restore responsible lending practices. The combination of tight lending criteria and falling house prices could have a profound impact on already-low consumer confidence in the US and subsequently on economic growth in the world’s biggest economy.
South Africa is by no means immune to the recessionary conditions and financial strain that may emanate as a result of the current crisis in the US. That being said, FNB’s most likely scenario appears to be one where domestic growth is slower, but remains positive. This would ultimately lead to a recovery in the demand for residential property from next year, as interest rates begin to decline.
South African consumers would do well not to ignore the current global growth risks when making investments going forward. If the crisis in the US gets significantly worse then the local property market will by no means escape unscathed. Loos suggests taking caution with regard to spending and borrowing practices until such time as we have more reliable indications of where the crisis stands. Despite some encouraging inflation and interest rates signs, South Africa is far from being out of the dark just yet.
This information is courtesy of John Loos (“Risks to property shift from interest rates to economic growth – ignore at your peril”, ITInews, 6 October 2008).
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Tuesday, October 7, 2008
Thursday, October 2, 2008
Standard Bank Says House Prices Improving
A recent article published by Reuters discusses South African house prices, indicating an increase of 3.6 percent year-on-year in September. This is the first increase in 10 months, reflecting fresh activity in the ailing market after an extremely difficult year.
Standard Bank’s property gauge released on a monthly basis showed an increase in the median house price at R580 000. The five month moving average is still in negative terrain, but has improved year-on-year to –5.5 percent after several months of steadily falling prices.
After sharp declines in May and June, Standard Bank said that the rate of decline slowed in July and August, but indicated that the property sector would remain under pressure until consumer spending starts to recover from its cooling period.
The bank said in a statement that, “The unexpected 3.6 percent increase in September is not seen as a new trend, but rather the result of volatile monthly data. It is anticipated that the index will once again show low or negative growth in the months to come. Nonetheless, the latest data show that there is some life in the property market”.
Household budgets have taken a beating with the enforcement of stricter lending laws and a series of interest rate increases, which has in turn put the housing sector under strain. The central bank increased the repo lending rate by 5 percentage points to 12 percent between June 2006 and June 2008 in a bid to fight inflation.
This house price increase coincides with a slowing in the upward rates cycle in August and market experts predict that the next move in interest rates will be down sometime in 2009. Slowing household spending is evident in falling retail and new vehicle sales and the bank believes that the sector may not recover until this picks up again and interest rates start falling.
“Residential property will remain in the doldrums until such time that fundamental drivers of the market turn for the better and that may be some time off,” according to Standard Bank.
The information in this article is courtesy of Reuters Africa (“S.Africa house prices up, but problems remain”, 2 October 2008).
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Standard Bank’s property gauge released on a monthly basis showed an increase in the median house price at R580 000. The five month moving average is still in negative terrain, but has improved year-on-year to –5.5 percent after several months of steadily falling prices.
After sharp declines in May and June, Standard Bank said that the rate of decline slowed in July and August, but indicated that the property sector would remain under pressure until consumer spending starts to recover from its cooling period.
The bank said in a statement that, “The unexpected 3.6 percent increase in September is not seen as a new trend, but rather the result of volatile monthly data. It is anticipated that the index will once again show low or negative growth in the months to come. Nonetheless, the latest data show that there is some life in the property market”.
Household budgets have taken a beating with the enforcement of stricter lending laws and a series of interest rate increases, which has in turn put the housing sector under strain. The central bank increased the repo lending rate by 5 percentage points to 12 percent between June 2006 and June 2008 in a bid to fight inflation.
This house price increase coincides with a slowing in the upward rates cycle in August and market experts predict that the next move in interest rates will be down sometime in 2009. Slowing household spending is evident in falling retail and new vehicle sales and the bank believes that the sector may not recover until this picks up again and interest rates start falling.
“Residential property will remain in the doldrums until such time that fundamental drivers of the market turn for the better and that may be some time off,” according to Standard Bank.
The information in this article is courtesy of Reuters Africa (“S.Africa house prices up, but problems remain”, 2 October 2008).
Buy or sell property in Cape Town's False Bay area.
Tuesday, September 30, 2008
Manage Your Finances Wisely and Survive the Slump
An article in The Times discusses the recent drop in value of assets under management experienced by private client operations following the recent fall in markets. Sean Farrell, CEO of RMB Private Bank, says that the falling markets have affected the private banking sector, as clients have seen the value of their property and equity portfolios decline.
According to Farrell, primary residences tend to have the least effect, as people still need a home in which to live. However, the decline in property prices can also result in homeowners having negative equity in their homes, investment properties and business premises.
“Fortunately, we have not seen that in our business so far, as many of our clients who run into trouble on the lending side are able to trade out of their positions by shedding some assets,” said Farrell.
When it comes to equity, Farrell says that clients can literally see their net asset value decline as the market falls. Even so, RMB Private Bank’s net inflows into its wealth management business were over R1 billion in August, which suggests that clients still have cash to invest.
“We have built a very robust process when it comes to asset allocation. Wealth managers are particularly keen to establish clients’ short-term income and liability needs, so that there is no need to engage in fire sales in declining market conditions to meet their obligations,” said Farrell.
He went on to say that, “When there is a short-term liquidity need, we are not going to pump all the assets into equities, but rather keep an appropriate portion in cash. As a result, clients are well positioned to ride out poor market conditions and their losses remain paper losses that are reversed when markets turn”.
The poor market conditions serve to reinforce the need for a proper strategy that has been presented to and agreed with by clients. “We are going through an extreme downturn. Provided their strategy is still relevant, they must sit tight and ride the cycle and not panic. In equities there has been a fair amount of sector rotation and a weighing towards more cash than direct equities. It is in poor market conditions that your process is tested,” argued Farrell.
Mark Logan, head of private clients at Grindrod Bank, said that another consequence of poor markets is that revenues on the investment side of business fell. “However, falling markets also provide opportunities as it is at such times that clients start questioning their private banks’ investment philosophy and performance and there can be some churn as clients shift banks. Bad markets can result in you gaining or losing clients”.
Logan went on to say that volatile markets also force private banks to increase their level of communication with the client to both reassure and keep them in touch with events and market trends. He said that the wealth management operations of private banks must have a credible strategy and an investment philosophy that clients support.
The information in this article is courtesy of Andrew Gillingham (“Still plenty of cash to invest”, The Times, 27 September 2008).
Find property for sale in Kommetjie, Noordhoek and all over the False Bay area.
According to Farrell, primary residences tend to have the least effect, as people still need a home in which to live. However, the decline in property prices can also result in homeowners having negative equity in their homes, investment properties and business premises.
“Fortunately, we have not seen that in our business so far, as many of our clients who run into trouble on the lending side are able to trade out of their positions by shedding some assets,” said Farrell.
When it comes to equity, Farrell says that clients can literally see their net asset value decline as the market falls. Even so, RMB Private Bank’s net inflows into its wealth management business were over R1 billion in August, which suggests that clients still have cash to invest.
“We have built a very robust process when it comes to asset allocation. Wealth managers are particularly keen to establish clients’ short-term income and liability needs, so that there is no need to engage in fire sales in declining market conditions to meet their obligations,” said Farrell.
He went on to say that, “When there is a short-term liquidity need, we are not going to pump all the assets into equities, but rather keep an appropriate portion in cash. As a result, clients are well positioned to ride out poor market conditions and their losses remain paper losses that are reversed when markets turn”.
The poor market conditions serve to reinforce the need for a proper strategy that has been presented to and agreed with by clients. “We are going through an extreme downturn. Provided their strategy is still relevant, they must sit tight and ride the cycle and not panic. In equities there has been a fair amount of sector rotation and a weighing towards more cash than direct equities. It is in poor market conditions that your process is tested,” argued Farrell.
Mark Logan, head of private clients at Grindrod Bank, said that another consequence of poor markets is that revenues on the investment side of business fell. “However, falling markets also provide opportunities as it is at such times that clients start questioning their private banks’ investment philosophy and performance and there can be some churn as clients shift banks. Bad markets can result in you gaining or losing clients”.
Logan went on to say that volatile markets also force private banks to increase their level of communication with the client to both reassure and keep them in touch with events and market trends. He said that the wealth management operations of private banks must have a credible strategy and an investment philosophy that clients support.
The information in this article is courtesy of Andrew Gillingham (“Still plenty of cash to invest”, The Times, 27 September 2008).
Find property for sale in Kommetjie, Noordhoek and all over the False Bay area.
Wednesday, September 24, 2008
Wall Street Crisis Hurts Global Markets
While the main saga plays itself out in New York and London, there has been a significant ripple effect on the rest of the world. Investors in emerging markets like South Africa, which are known as “second tier economies”, have predicted an era of stunted growth and weaker currency.
Overall, emerging markets are already down 33% this year, which is far worse than the performance on Wall Street itself. Concern over Washington’s $700 billion bailout plan played a part in the tumble of the rand on Tuesday by more than 2%. Stock markets in India, Turkey and Russia all fell by more than 3%.
However, there are very few market analysts that predict a return to the financial drama that overwhelmed Asian economies in 1997, as well as Russia, Brazil, Argentina and Turkey in subsequent years. Emerging markets like South Africa are far more robust financially than in the past, with healthy surpluses that have been accumulated for just such a rainy day. There are some that might even attract investors wary of Wall Street and London.
According to Arnab Das, head of emerging markets research at Dresdner Kleinwort, an investment bank in London, “The unfortunate reality is that in one way or another everyone in the world is exposed, but that doesn’t mean there won’t be winners and losers”.
Mark Williams, an analyst of emerging Asian economies at Capital Economics, a London consulting firm, says, “Whenever something like this has happened, risk aversion has always won out and emerging markets tend to suffer more than most when the world gets into trouble”.
The primary factor for concern is that these countries generally run large current account (trade) deficits, which continue to rely on foreign investment to balance the books. South Africa’s deficit is close to 10% of gross domestic product, while in some countries like the Balkans and the Baltics it is even higher.
Royal Bank of Canada’s emerging markets strategist, Nigel Rendell says, “The financial stress leads investors to avoid things that are high risk. Emerging markets can be a high risk and an area to keep out of”. He goes on to say that if investment dries up then these countries could be left short of cash. Consequently, the only option left is to let the currencies slide.
The currency “is either devalued, or allowed to depreciate, or you have to slow down the domestic economy and slow imports from coming in at such a rate,” Rendell says. This could signal a sharp slowdown in growth rates in Turkey and Eastern Europe.
India Leaking Capital
India also seems to have been ‘leaking capital’, which has resulted in a failing currency that has subsequently put upward pressure on inflation, with figures currently more than 12%. “Comparatively, we would say India is relatively insulated because its economy is relatively closed, but we have seen capital leaving India and pressure on the currency,” says Hugo Navarro, an economist at Capital Economics. “It’s to the stage where the government is stepping in and taking steps to strengthen [the rupiah] because of concerns over inflation”.
The more optimistic news is that there are emerging economies like Russia and Brazil that are flush with cash due to peak commodity prices, as well as an economic boom in China. But even these countries are not immune, as leading Shanghai stocks are down more than 60% from their peak. The Russian market was suspended for 2 days last week having fallen more than 50% over the past four months.
It has been noted by Williams that emerging Asian stocks have dropped by more than those in developed countries, but this does not mean that the region suffers from the same financial imbalances as those affecting Western finance. “We’ve seen nothing like the kind of property bubble that has grown up in the US and UK, so there is good reason to think that Asian growth will hold up pretty well,” he adds.
The big question seems to be whether the US and European economies will slow down enough to affect Asian exports, but Williams believes that both India and China are well protected in the fact that much of the demand is generated by domestic consumers. “But some of the smaller economies like Singapore, Malaysia and Taiwan are very reliant on exports to the US and Europe”.
Another gauge of how healthy emerging markets are is the premium that has to be paid by borrowers. This has been steadily increasing in recent months, making loans much more expensive and initiating questions about whether borrowers will actually be able to pay off their loans when due dates fall.
Refinancing Loans
Dutch bank ING has calculated that $111 billion worth of emerging market bonds will have to be refinanced in the next year. With credit tight, there is doubt as to whether corporate borrowers will be able to refinance their loans.
Das doesn’t believe that we will see a sovereign debt default problem, where countries are unable to pay back their loans. Instead, the focus will be on banks and companies “that have been major issuers into the credit bubble”.
He goes on to say that, “Russia, Kazakhstan and Ukraine had a number of banks issuing debt. They haven’t all lost access [to credit], but if even Gazprom is having to pay higher [interest rate] spreads [on loans], you can be sure that the weaker names will continue to have a much harder time getting bond deals done”.
The information in this article is courtesy of Mark Rice-Oxley (“Emerging Markets Hit Hard by Wall Street Crisis”, The Christian Science Monitor, 24 September 2008).
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Overall, emerging markets are already down 33% this year, which is far worse than the performance on Wall Street itself. Concern over Washington’s $700 billion bailout plan played a part in the tumble of the rand on Tuesday by more than 2%. Stock markets in India, Turkey and Russia all fell by more than 3%.
However, there are very few market analysts that predict a return to the financial drama that overwhelmed Asian economies in 1997, as well as Russia, Brazil, Argentina and Turkey in subsequent years. Emerging markets like South Africa are far more robust financially than in the past, with healthy surpluses that have been accumulated for just such a rainy day. There are some that might even attract investors wary of Wall Street and London.
According to Arnab Das, head of emerging markets research at Dresdner Kleinwort, an investment bank in London, “The unfortunate reality is that in one way or another everyone in the world is exposed, but that doesn’t mean there won’t be winners and losers”.
Mark Williams, an analyst of emerging Asian economies at Capital Economics, a London consulting firm, says, “Whenever something like this has happened, risk aversion has always won out and emerging markets tend to suffer more than most when the world gets into trouble”.
The primary factor for concern is that these countries generally run large current account (trade) deficits, which continue to rely on foreign investment to balance the books. South Africa’s deficit is close to 10% of gross domestic product, while in some countries like the Balkans and the Baltics it is even higher.
Royal Bank of Canada’s emerging markets strategist, Nigel Rendell says, “The financial stress leads investors to avoid things that are high risk. Emerging markets can be a high risk and an area to keep out of”. He goes on to say that if investment dries up then these countries could be left short of cash. Consequently, the only option left is to let the currencies slide.
The currency “is either devalued, or allowed to depreciate, or you have to slow down the domestic economy and slow imports from coming in at such a rate,” Rendell says. This could signal a sharp slowdown in growth rates in Turkey and Eastern Europe.
India Leaking Capital
India also seems to have been ‘leaking capital’, which has resulted in a failing currency that has subsequently put upward pressure on inflation, with figures currently more than 12%. “Comparatively, we would say India is relatively insulated because its economy is relatively closed, but we have seen capital leaving India and pressure on the currency,” says Hugo Navarro, an economist at Capital Economics. “It’s to the stage where the government is stepping in and taking steps to strengthen [the rupiah] because of concerns over inflation”.
The more optimistic news is that there are emerging economies like Russia and Brazil that are flush with cash due to peak commodity prices, as well as an economic boom in China. But even these countries are not immune, as leading Shanghai stocks are down more than 60% from their peak. The Russian market was suspended for 2 days last week having fallen more than 50% over the past four months.
It has been noted by Williams that emerging Asian stocks have dropped by more than those in developed countries, but this does not mean that the region suffers from the same financial imbalances as those affecting Western finance. “We’ve seen nothing like the kind of property bubble that has grown up in the US and UK, so there is good reason to think that Asian growth will hold up pretty well,” he adds.
The big question seems to be whether the US and European economies will slow down enough to affect Asian exports, but Williams believes that both India and China are well protected in the fact that much of the demand is generated by domestic consumers. “But some of the smaller economies like Singapore, Malaysia and Taiwan are very reliant on exports to the US and Europe”.
Another gauge of how healthy emerging markets are is the premium that has to be paid by borrowers. This has been steadily increasing in recent months, making loans much more expensive and initiating questions about whether borrowers will actually be able to pay off their loans when due dates fall.
Refinancing Loans
Dutch bank ING has calculated that $111 billion worth of emerging market bonds will have to be refinanced in the next year. With credit tight, there is doubt as to whether corporate borrowers will be able to refinance their loans.
Das doesn’t believe that we will see a sovereign debt default problem, where countries are unable to pay back their loans. Instead, the focus will be on banks and companies “that have been major issuers into the credit bubble”.
He goes on to say that, “Russia, Kazakhstan and Ukraine had a number of banks issuing debt. They haven’t all lost access [to credit], but if even Gazprom is having to pay higher [interest rate] spreads [on loans], you can be sure that the weaker names will continue to have a much harder time getting bond deals done”.
The information in this article is courtesy of Mark Rice-Oxley (“Emerging Markets Hit Hard by Wall Street Crisis”, The Christian Science Monitor, 24 September 2008).
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Thursday, September 18, 2008
Government Should Give First Time Buyer Concessions
Call for Review of Property Laws
Jeanne van Jarsveldt, financial director of RE/MAX Southern Africa has indicated that a serious review of the law is needed to stimulate the property market and encourage first time buyers to invest. He would like to see the current threshold on payment of transfer duty to be enforced on sales over R1 million and this should be accompanied by tax breaks for first time buyers.
A “rescue package from government” seems to be what is needed in order to avoid further distress in the South African property market. Van Jaarsveldt said that the US anchored its recently launched Housing Stimulus Bill around a tax break of over R52 000 for first time buyers in an effort to stabilize the flailing market.
A similar tax concession in South Africa would go along way towards relieving some of the pressure on affordability for first time buyers, who are trapped by the five percentage point interest rate increases over the last two years.
Van Jaarsveldt also believes that a temporary suspension of transfer duty on all price categories is worth considering, at least until the market has begun to recover. He indicated that the Real Estate Institute of Australia is pressuring the government for an exemption from stamp duty on first time buyer transactions, as well as on retirees downsizing their properties. The same is happening with Britain’s National Association of Estate Agents in the UK.
According to economists, abolishing transfer tax would cause the treasury to lose around R10 billion a year, which would not make too much of a dent in the government’s budget, but would certainly ease the buying and selling of homes.
Mike Bennet, head of ProProp Franchising Group, agrees with van Jaarsveldt in his call for a temporary suspension of all transfer duty on sales under R1 million until the market starts to improve and would also like to see banks given permission to relax the National Credit Act rules on houses selling for less than R700 000.
Van Jaarsveldt refers to the property market as “a pillar of our economy” and believes that the current high number of negatives surrounding the market make it absolutely crucial that some concession be made in order to stimulate home ownership.
He said, “To ignore the situation seriously jeopardizes the growth of the emergent black middle class who we all know are vital at this stage of our country’s transformation”.
The information in this article is courtesy of Jeanne van Jaarsveldt (“First-time buyers need a break – ReMax”, Business Report, 17 September 2008).
False Bay property for sale in Noordhoek, Kommetjie and Misty Cliffs.
Jeanne van Jarsveldt, financial director of RE/MAX Southern Africa has indicated that a serious review of the law is needed to stimulate the property market and encourage first time buyers to invest. He would like to see the current threshold on payment of transfer duty to be enforced on sales over R1 million and this should be accompanied by tax breaks for first time buyers.
A “rescue package from government” seems to be what is needed in order to avoid further distress in the South African property market. Van Jaarsveldt said that the US anchored its recently launched Housing Stimulus Bill around a tax break of over R52 000 for first time buyers in an effort to stabilize the flailing market.
A similar tax concession in South Africa would go along way towards relieving some of the pressure on affordability for first time buyers, who are trapped by the five percentage point interest rate increases over the last two years.
Van Jaarsveldt also believes that a temporary suspension of transfer duty on all price categories is worth considering, at least until the market has begun to recover. He indicated that the Real Estate Institute of Australia is pressuring the government for an exemption from stamp duty on first time buyer transactions, as well as on retirees downsizing their properties. The same is happening with Britain’s National Association of Estate Agents in the UK.
According to economists, abolishing transfer tax would cause the treasury to lose around R10 billion a year, which would not make too much of a dent in the government’s budget, but would certainly ease the buying and selling of homes.
Mike Bennet, head of ProProp Franchising Group, agrees with van Jaarsveldt in his call for a temporary suspension of all transfer duty on sales under R1 million until the market starts to improve and would also like to see banks given permission to relax the National Credit Act rules on houses selling for less than R700 000.
Van Jaarsveldt refers to the property market as “a pillar of our economy” and believes that the current high number of negatives surrounding the market make it absolutely crucial that some concession be made in order to stimulate home ownership.
He said, “To ignore the situation seriously jeopardizes the growth of the emergent black middle class who we all know are vital at this stage of our country’s transformation”.
The information in this article is courtesy of Jeanne van Jaarsveldt (“First-time buyers need a break – ReMax”, Business Report, 17 September 2008).
False Bay property for sale in Noordhoek, Kommetjie and Misty Cliffs.
Monday, September 15, 2008
Good News for Property Buyers
Bank managers loosen screws for property buyers
Realestateweb.co.za reporter
08 September 2008
At last some good news for the residential sector: Mortgage rejection figures have eased slightly and buyers get bigger interest rate discounts.
At last there is some good news for the residential real estate sector.
Mortgage rejection figures eased slightly and buyers got better interest rate discounts in August, new figures from the country's largest mortgage originator, ooba, suggest.
Ooba issued its second "oobarometer" price index on Monday. Price trends still look horrible, with the average house price down from R821 351 in August last year to R776 048 in the same month this year.
But, noted ooba Chief Executive Officer Saul Geffen: "While house prices continue their downward trend, there have been improvements in average decline ratios and rate concessions."
The average decline ratio - or percentage of all loan applications initially rejected by banks - improved by 1,3% to 49,8%, he said. Of those, however, more than 30% received a home loan from another bank.
Interest rate discounts, or concessions, to the prime interest rate "also show a slight improvement on last month".
It was at about 1,24% compared to 1,21% in July, said ooba. The top 10% of customers are enjoying a discount of just under 2% to prime (1,91%), said the originator.
Other trends noted by ooba include that:
* First-time buyers are still feeling the pinch, with the average purchase price for this segment down to about R490 000. This figure a year ago was about R550 000.
* Deposits have also risen sharply, from 11% to just under 20% (18,8%), "reflecting the significant shift in banks' lending criteria".
Find property for sale in the False Bay area of Cape Town.
Realestateweb.co.za reporter
08 September 2008
At last some good news for the residential sector: Mortgage rejection figures have eased slightly and buyers get bigger interest rate discounts.
At last there is some good news for the residential real estate sector.
Mortgage rejection figures eased slightly and buyers got better interest rate discounts in August, new figures from the country's largest mortgage originator, ooba, suggest.
Ooba issued its second "oobarometer" price index on Monday. Price trends still look horrible, with the average house price down from R821 351 in August last year to R776 048 in the same month this year.
But, noted ooba Chief Executive Officer Saul Geffen: "While house prices continue their downward trend, there have been improvements in average decline ratios and rate concessions."
The average decline ratio - or percentage of all loan applications initially rejected by banks - improved by 1,3% to 49,8%, he said. Of those, however, more than 30% received a home loan from another bank.
Interest rate discounts, or concessions, to the prime interest rate "also show a slight improvement on last month".
It was at about 1,24% compared to 1,21% in July, said ooba. The top 10% of customers are enjoying a discount of just under 2% to prime (1,91%), said the originator.
Other trends noted by ooba include that:
* First-time buyers are still feeling the pinch, with the average purchase price for this segment down to about R490 000. This figure a year ago was about R550 000.
* Deposits have also risen sharply, from 11% to just under 20% (18,8%), "reflecting the significant shift in banks' lending criteria".
Find property for sale in the False Bay area of Cape Town.
Monday, September 8, 2008
How to Thrive in Tough Conditions
Expert Advice on How to Sell Property
Despite the current economic conditions where the property market is particularly sluggish, there are experts who believe that there are still ways to maximize profits. Bill Gibson is a sales specialist who spoke to estate agents at a national conference of the Institute of Estate Agents (IEASA) in Johannesburg recently. He insisted that times like these can often provide the best opportunities to gain market share.
While sellers are in abundance, finding them is still the most important factor, Gibson says. “This is the time that estate agents need to be actively involved in listing properties if they want them sold,” he urges. This means increasing canvassing by between 20% and 40% and Gibson also suggested that estate agents hold show houses with properties where other agents have the mandate. This obviously requires permission from the seller and agent, as well as a follow up on all potential buyers who walk through the show house door.
According to Gibson, investment seminars are an ideal platform to mingle and circulate, while referrals are “a good source of potential buyers and sellers”. This all begins with one’s circle of friends and business associates. Even in tough times, there are still buyers and agents simply have to work that much harder to find them.
Business and coaching specialist, Graham le Sar said that the market right now is just as it should be. Estate agents, on the other hand, need to become more innovative in their response to the market if they are to sell properties successfully. He likened real estate to a contact sport, saying that estate agents constantly have to engage potential buyers, sellers and homeowners to keep the momentum going.
Le Sar went on to say that, “The biggest mistake estate agents make is doing nothing when the property market is down”. He says that estate agents really need to find ways of preparing themselves for a change in the market. While they may work less, they also need to work more thoroughly and ensure that every detail of a transaction is covered fully and clearly explained to clients. “Homeowners will always own houses and these are the first potential buyers when they sell,” le Sar points out.
Graham Gavin, author of Real Estate Power, has said that successful estate agents generate new ideas and fresh leads on a daily basis. He also believes that it is possible to thrive in a downcycle if you have the right attitude, plus a few extra measures thrown in that make the estate agent stand out in a crowd.
Gavin also said that estate agents are not paid for the time that they put into selling houses, but how they sell them. For instance, if you sell successfully to one client then you will no doubt get more referrals for the outstanding service. “To thrive in a down market, think smart and swiftly implement those strategies in every transaction you make,” advises Gavin.
The information in this article is courtesy of Denise Mhlanga (“Making money in a sluggish property market”, Realestateweb, 8 September 2008).
Find property in Simon's Town, Fishhoek, Noordhoek and the False Bay area.
Despite the current economic conditions where the property market is particularly sluggish, there are experts who believe that there are still ways to maximize profits. Bill Gibson is a sales specialist who spoke to estate agents at a national conference of the Institute of Estate Agents (IEASA) in Johannesburg recently. He insisted that times like these can often provide the best opportunities to gain market share.
While sellers are in abundance, finding them is still the most important factor, Gibson says. “This is the time that estate agents need to be actively involved in listing properties if they want them sold,” he urges. This means increasing canvassing by between 20% and 40% and Gibson also suggested that estate agents hold show houses with properties where other agents have the mandate. This obviously requires permission from the seller and agent, as well as a follow up on all potential buyers who walk through the show house door.
According to Gibson, investment seminars are an ideal platform to mingle and circulate, while referrals are “a good source of potential buyers and sellers”. This all begins with one’s circle of friends and business associates. Even in tough times, there are still buyers and agents simply have to work that much harder to find them.
Business and coaching specialist, Graham le Sar said that the market right now is just as it should be. Estate agents, on the other hand, need to become more innovative in their response to the market if they are to sell properties successfully. He likened real estate to a contact sport, saying that estate agents constantly have to engage potential buyers, sellers and homeowners to keep the momentum going.
Le Sar went on to say that, “The biggest mistake estate agents make is doing nothing when the property market is down”. He says that estate agents really need to find ways of preparing themselves for a change in the market. While they may work less, they also need to work more thoroughly and ensure that every detail of a transaction is covered fully and clearly explained to clients. “Homeowners will always own houses and these are the first potential buyers when they sell,” le Sar points out.
Graham Gavin, author of Real Estate Power, has said that successful estate agents generate new ideas and fresh leads on a daily basis. He also believes that it is possible to thrive in a downcycle if you have the right attitude, plus a few extra measures thrown in that make the estate agent stand out in a crowd.
Gavin also said that estate agents are not paid for the time that they put into selling houses, but how they sell them. For instance, if you sell successfully to one client then you will no doubt get more referrals for the outstanding service. “To thrive in a down market, think smart and swiftly implement those strategies in every transaction you make,” advises Gavin.
The information in this article is courtesy of Denise Mhlanga (“Making money in a sluggish property market”, Realestateweb, 8 September 2008).
Find property in Simon's Town, Fishhoek, Noordhoek and the False Bay area.
Friday, September 5, 2008
What Are the Banks Predicting for Residential Property in SA?
House Price Index Stats - Worst Case Scenario
The latest reports from FNB’s house price index indicate that a drop of 5% is the worst South African consumers can expect before things in the residential property market begin to improve. Before now, FNB’s property watchers have relied primarily on data retrieved from other sources, but the bank has now developed its own index, using details from mortgages approved to produce price inflation figures.
According to FNB, the results of this new index are relatively similar to ABSA’s, with the figures indicating a 2.3% year on year increase in house prices in August. This is down 3.5% from the data recorded in July and reflects a continuing “declining inflation trend”. In real terms, FNB’s property strategist John Loos says that there has been a drop of almost 9% and that basis prices are dropping month to month, with a –0.3% fall in nominal terms in August.
“While month on month house price deflation is already here, year on year price deflation is expected to arrive soon. However, no ‘freefall’ is anticipated. Rather, around a –5% year on year deflation is expected at the worst part of the price cycle in the first half of 2009,” says Loos. He goes on to say that after that, price inflation is predicted to resume late next year “on the back of recovering economic growth and declining interest rates”.
According to FNB’s market sample, the average house price transacted as at August was around R681 000, while the median price was about R550 000. “In reality though, both measures are over-estimates of what the average house value in South Africa really is. This is because higher income households are generally more mobile than low income ones, which means that a greater percentage of total stocks gets traded in middle to upper income areas, as opposed to, for example, black townships,” explains Loos.
Loos argues that if every property could be valued, even RDP housing, regardless of whether it gets transacted, the average median values would be considerably lower. The FNB house price index is calculated using the average value of housing transactions financed by the bank. He says that in order to eliminate outliers from the data sample, transaction values have to be above 70% of the property valuation, but below 130%, while sales concluded above R10m and below R20 000 are excluded.
The strategist emphasized that the house price depicted in indices does not really show the “full extent of residential market weakness”. In fact, “sellers are somewhat inflexible when it comes to dropping their asking price. Some would stay out of the market during these weak times, while others hold on longer to obtain their price, often incurring higher holding costs,” Loos says.
Therefore, sales volumes would probably give a better reflection of the current state of the market than prices. Agents are generally seeing volumes down by close to half of what they were at the same time last year. Meanwhile, ABSA also released their house price index on Thursday and put the average house price at about R962 500. The average nominal price of a medium sized house with an average price of around R946 200 increased by a mere 2% year on year in August, which incidentally is the lowest growth rate since January 1993, this according to ABSA’s senior property analyst Jacques du Toit. Larger houses (up to 400m²) increased by a little over 1% according to the data supplied by ABSA, which brings the average house price to R1 368 000 and small houses increased by just under 4%, bringing the average house price in this sector to about R682 500.
In real terms though, ABSA says that house prices have been falling for the last six months with a drop not far off 10% in July. The bank believes that real house prices are set to drop by another 7% this year, which is the first annual decline since 1999. The nominal growth rate for 2008 is expected at around 4.5%.
“It is, however, only in 2010 that nominal price growth is expected to rise to a level of above 10% again, while real price growth is projected to turn positive in the same year after two years (2008 and 2009) of real price declines,” according to du Toit. He goes on to say that the latter part of this year and early 2009 will probably be “the best time to buy property”.
The information in this article is courtesy of Realestatweb (“Residential property prices: the worst-case scenario”, 4 September 2008).
Buy or sell property in Scarborough, Fish Hoek or Kommetjie in the False Bay area of Cape Town, South Africa.
The latest reports from FNB’s house price index indicate that a drop of 5% is the worst South African consumers can expect before things in the residential property market begin to improve. Before now, FNB’s property watchers have relied primarily on data retrieved from other sources, but the bank has now developed its own index, using details from mortgages approved to produce price inflation figures.
According to FNB, the results of this new index are relatively similar to ABSA’s, with the figures indicating a 2.3% year on year increase in house prices in August. This is down 3.5% from the data recorded in July and reflects a continuing “declining inflation trend”. In real terms, FNB’s property strategist John Loos says that there has been a drop of almost 9% and that basis prices are dropping month to month, with a –0.3% fall in nominal terms in August.
“While month on month house price deflation is already here, year on year price deflation is expected to arrive soon. However, no ‘freefall’ is anticipated. Rather, around a –5% year on year deflation is expected at the worst part of the price cycle in the first half of 2009,” says Loos. He goes on to say that after that, price inflation is predicted to resume late next year “on the back of recovering economic growth and declining interest rates”.
According to FNB’s market sample, the average house price transacted as at August was around R681 000, while the median price was about R550 000. “In reality though, both measures are over-estimates of what the average house value in South Africa really is. This is because higher income households are generally more mobile than low income ones, which means that a greater percentage of total stocks gets traded in middle to upper income areas, as opposed to, for example, black townships,” explains Loos.
Loos argues that if every property could be valued, even RDP housing, regardless of whether it gets transacted, the average median values would be considerably lower. The FNB house price index is calculated using the average value of housing transactions financed by the bank. He says that in order to eliminate outliers from the data sample, transaction values have to be above 70% of the property valuation, but below 130%, while sales concluded above R10m and below R20 000 are excluded.
The strategist emphasized that the house price depicted in indices does not really show the “full extent of residential market weakness”. In fact, “sellers are somewhat inflexible when it comes to dropping their asking price. Some would stay out of the market during these weak times, while others hold on longer to obtain their price, often incurring higher holding costs,” Loos says.
Therefore, sales volumes would probably give a better reflection of the current state of the market than prices. Agents are generally seeing volumes down by close to half of what they were at the same time last year. Meanwhile, ABSA also released their house price index on Thursday and put the average house price at about R962 500. The average nominal price of a medium sized house with an average price of around R946 200 increased by a mere 2% year on year in August, which incidentally is the lowest growth rate since January 1993, this according to ABSA’s senior property analyst Jacques du Toit. Larger houses (up to 400m²) increased by a little over 1% according to the data supplied by ABSA, which brings the average house price to R1 368 000 and small houses increased by just under 4%, bringing the average house price in this sector to about R682 500.
In real terms though, ABSA says that house prices have been falling for the last six months with a drop not far off 10% in July. The bank believes that real house prices are set to drop by another 7% this year, which is the first annual decline since 1999. The nominal growth rate for 2008 is expected at around 4.5%.
“It is, however, only in 2010 that nominal price growth is expected to rise to a level of above 10% again, while real price growth is projected to turn positive in the same year after two years (2008 and 2009) of real price declines,” according to du Toit. He goes on to say that the latter part of this year and early 2009 will probably be “the best time to buy property”.
The information in this article is courtesy of Realestatweb (“Residential property prices: the worst-case scenario”, 4 September 2008).
Buy or sell property in Scarborough, Fish Hoek or Kommetjie in the False Bay area of Cape Town, South Africa.
Monday, September 1, 2008
Could Be Entering Best Time to Buy Property in SA
Sentiment Seems to be Improving in SA
No doubt, there are many South African consumers who breathed a significant sigh of relief at the Reserve Bank’s recent decision to put interest rates on hold. According to Rael Levitt, chief executive of the Alliance Group, both investors and property owners had realized the country was most likely at the pinnacle of the interest rate cycle.
Levitt believes that investor sentiment in the residential and commercial property markets in particular has improved substantially over the last two weeks. “Trading on our auction floors in August throughout the country has seen the strongest investor appetite in over 12 months and our success rates and bidding activity has literally changed overnight,” he explains.
Prior to the South African Reserve Bank’s (SARB) decision to place interest rates on hold, investors were beginning to believe the property market was heading for a recession and with the added worries of political insecurity, crime, xenophobic violence, the Eskom crisis, as well as food and fuel inflation, public sentiment literally took a nosedive, says Levitt.
“South Africans are naturally resilient investors, but consumer and business confidence took a big knock in the first half of the year,” Levitt adds. He goes on to say that the commercial property market tracked interest rates and while there had been “insignificant pockets” of financial distress in the sector, it has remained relatively resilient, despite the continued weakening of business confidence.
There are local investors who experienced downturns in the 1990s and realized that the current downtrend was nowhere near the slump of the previous period, when the investors tended to shy away from property investment. “In fact, most of our investors now realize that if interest rate levels are peaking, this is the time when they should be investing in a market which is offering great value,” says Levitt.
Levitt argues that as South African investors get used to the neutral stance taken by the SARB, they will realize that there is a small window of opportunity for fixed property investment, which has all the necessary fundamentals for medium and long-term growth. However, the economy is not yet out of the dark and the residential property market has the extra burden of heavy borrowing, which comes at a significantly high cost.
“We still see further price deceleration into 2009 and increased mortgage stress, which always has a lag effect after interest rates have spiked,” warns Levitt. He adds that there are a number of residential property buyers and investors, who have deep pockets and are literally snapping up residential properties in the suburbs across the country, at prices that will seem bargain basement in two years time.
The gist of the matter seems to be that many buyers and investors have realized that the next 12 months will be the best opportunity in 20 years to buy residential property.
The information in this article is courtesy of Sapa (“Rate call to slowly trickle through market”, IOL, 1 September 2008).
Buy or sell property in False Bay, Scarborough or Noordhoek in South Africa.
No doubt, there are many South African consumers who breathed a significant sigh of relief at the Reserve Bank’s recent decision to put interest rates on hold. According to Rael Levitt, chief executive of the Alliance Group, both investors and property owners had realized the country was most likely at the pinnacle of the interest rate cycle.
Levitt believes that investor sentiment in the residential and commercial property markets in particular has improved substantially over the last two weeks. “Trading on our auction floors in August throughout the country has seen the strongest investor appetite in over 12 months and our success rates and bidding activity has literally changed overnight,” he explains.
Prior to the South African Reserve Bank’s (SARB) decision to place interest rates on hold, investors were beginning to believe the property market was heading for a recession and with the added worries of political insecurity, crime, xenophobic violence, the Eskom crisis, as well as food and fuel inflation, public sentiment literally took a nosedive, says Levitt.
“South Africans are naturally resilient investors, but consumer and business confidence took a big knock in the first half of the year,” Levitt adds. He goes on to say that the commercial property market tracked interest rates and while there had been “insignificant pockets” of financial distress in the sector, it has remained relatively resilient, despite the continued weakening of business confidence.
There are local investors who experienced downturns in the 1990s and realized that the current downtrend was nowhere near the slump of the previous period, when the investors tended to shy away from property investment. “In fact, most of our investors now realize that if interest rate levels are peaking, this is the time when they should be investing in a market which is offering great value,” says Levitt.
Levitt argues that as South African investors get used to the neutral stance taken by the SARB, they will realize that there is a small window of opportunity for fixed property investment, which has all the necessary fundamentals for medium and long-term growth. However, the economy is not yet out of the dark and the residential property market has the extra burden of heavy borrowing, which comes at a significantly high cost.
“We still see further price deceleration into 2009 and increased mortgage stress, which always has a lag effect after interest rates have spiked,” warns Levitt. He adds that there are a number of residential property buyers and investors, who have deep pockets and are literally snapping up residential properties in the suburbs across the country, at prices that will seem bargain basement in two years time.
The gist of the matter seems to be that many buyers and investors have realized that the next 12 months will be the best opportunity in 20 years to buy residential property.
The information in this article is courtesy of Sapa (“Rate call to slowly trickle through market”, IOL, 1 September 2008).
Buy or sell property in False Bay, Scarborough or Noordhoek in South Africa.
Thursday, August 28, 2008
South African Expropriation Legislation on Hold
Land Reform Bill on Shelf
There has been vigorous debate recently concerning the government’s proposed Land Bill aimed at speeding up the land reform program in South Africa. Farmers and citizens alike can breathe a huge sigh of relief at news that the parliamentary committee has shelved the legislation, citing lack of consultation as the reason behind the decision and has said that the Bill will be reintroduced at a later date.
The government has said that it wants to redistribute nearly a third of white-owned farm land by 2014. At the end of Apartheid, almost 90% of South African land was owned by whites, who made up just 10% of the overall population at the time. So far, the land reform program has only succeeded in transferring 4% of this land to blacks.
Critics of the proposed legislation have argued that it would be unconstitutional, as it would prevent people from going to court should their property be taken. In fact, there are those who have argued that the expropriation could extend beyond agricultural property to all types of property, be it intellectual, commercial or personal.
The Land Bill was introduced by the ANC government in April this year and aimed to give the government greater powers to transfer land and property from existing owners. A committee statement said: “The decision [to shelve the bill] was reached after consultation with various stakeholders both within and outside parliament and in the interest of broader consultation and effective public participation”.
The government’s land restitution program is focused on returning land seized by whites after 1913 to the disenfranchised black population. However, earlier this year it was determined that the program had failed in its mandate. Thousands of claims are still being processed across the country for land and property that was taken unlawfully from black owners during the Apartheid era and before.
Farmers and civil society may well be pleased with the government’s decision to put the legislation on hold, but the reality remains that land redistribution continues to be a problem that needs to be addressed in South Africa. The government may have been stalled at this point, but no doubt there will be new legislation to follow.
The information in this article is courtesy of BBC News (“S Africa land reform bill shelved”, 27 August 2008).
Find property in Scarborough or Noordhoek in Cape Town's False Bay area.
There has been vigorous debate recently concerning the government’s proposed Land Bill aimed at speeding up the land reform program in South Africa. Farmers and citizens alike can breathe a huge sigh of relief at news that the parliamentary committee has shelved the legislation, citing lack of consultation as the reason behind the decision and has said that the Bill will be reintroduced at a later date.
The government has said that it wants to redistribute nearly a third of white-owned farm land by 2014. At the end of Apartheid, almost 90% of South African land was owned by whites, who made up just 10% of the overall population at the time. So far, the land reform program has only succeeded in transferring 4% of this land to blacks.
Critics of the proposed legislation have argued that it would be unconstitutional, as it would prevent people from going to court should their property be taken. In fact, there are those who have argued that the expropriation could extend beyond agricultural property to all types of property, be it intellectual, commercial or personal.
The Land Bill was introduced by the ANC government in April this year and aimed to give the government greater powers to transfer land and property from existing owners. A committee statement said: “The decision [to shelve the bill] was reached after consultation with various stakeholders both within and outside parliament and in the interest of broader consultation and effective public participation”.
The government’s land restitution program is focused on returning land seized by whites after 1913 to the disenfranchised black population. However, earlier this year it was determined that the program had failed in its mandate. Thousands of claims are still being processed across the country for land and property that was taken unlawfully from black owners during the Apartheid era and before.
Farmers and civil society may well be pleased with the government’s decision to put the legislation on hold, but the reality remains that land redistribution continues to be a problem that needs to be addressed in South Africa. The government may have been stalled at this point, but no doubt there will be new legislation to follow.
The information in this article is courtesy of BBC News (“S Africa land reform bill shelved”, 27 August 2008).
Find property in Scarborough or Noordhoek in Cape Town's False Bay area.
Tuesday, August 26, 2008
Green Building Phenomenon Takes Hold in SA
South Africa Going Green
Astute property developers, investors and entrepreneurs will no doubt already be aware of the next big era in the property, namely the profound impact that ‘green building’ practices are going to have on the industry in the foreseeable future. There are boundless business opportunities emerging as South Africa’s commercial property developers and investors join the bandwagon of what is fast-becoming a global phenomenon.
Building design is undergoing a transformation, moving away from work environments that are closed off from the outside world towards places of business designed to be at one with the natural surroundings. For instance, the power-draining air conditioners so often found in high-rise buildings and the shimmering glass towers that trap heat are set to become a thing of the past, as landlords and tenants demand real estate more reliant on renewable energy and reusable materials.
The recent IPD/Sapoa Property Investment Conference held in Cape Town recently focused primarily on the global trend towards constructing and refurbishing buildings along environmentally friendly lines. Delegates were informed that commercial property and the world’s airlines are two of the major contributors towards the production of dangerous carbon gas emissions destroying the earth’s ozone layer and as a result, contributing to the ever-looming global warming.
The South African real estate industry has only recently begun adopting green building standards, but the movement is expected to gain momentum. The Green Star Rating System is currently being introduced and although the ratings are not compulsory, pressure is anticipated to come from corporates, particularly those with international shareholders who want to be seen as socially and environmentally responsible.
According to the chairman of the Green Building Council of SA, Bruce Kerswill, “We in South Africa haven’t felt the sense of urgency on this yet. But we can expect to see stakeholder and government pressure here soon. South Africa has agreed to cut carbon emissions”. While some may not be inspired by the moral aspect, there is certainly a compelling business case for the greener option, with research showing that productivity can increase from about 5% to 15% with employees who work in a ‘green’ building.
Like all the healthier things in life, green buildings do tend to be on the expensive side when it comes to building and ultimately renting, however the cost is not quite as much as one might expect. For instance, in Australia a four-star building would cost the same as a non-green building in capital costs, while a five-star building requires more technology and would be around 5% extra in total cost. At 11% more for a six-star building, Kerswill believes this is “not a huge premium” to pay.
Buildings that promote the use of public transport rather than the use of private vehicles by being situated close to major transport nodes or because smaller cars get the best parking will earn more points than those that don’t. There is a huge emphasis on recycling and points are earned for sourcing local products rather than importing cheaper ones from elsewhere. There is another category that rewards “innovation” and this aims to “stimulate out of the box thinking” rather than simply adhering to the ratings.
Kerswill insists that this is not just a passing fad. Development director at Old Mutual Investment Group Property Investments, Brent Wilshire says that his organization has looked at their “top eight” buildings in a bid to identify areas to “make a difference”. He also produced some interesting figures indicating the extent to which these buildings ‘guzzle natural resources’. Just a 20% reduction in water use at these buildings alone would conserve enough water to fill 133 swimming pools every day.
“The important thing is you need to be able to measure then you can set targets,” Wiltshire says, highlighting the value of a green building rating system. “In our new assets, the green building principles are best practice. What is important is to get the right team in place. It’s about putting the philosophy in place upfront and making sure the team buys into it – it’s about an attitude”.
Managing director of IPD Occupiers and Management in the UK, Christopher Hedley indicates that corporate property will come under increased pressure and scrutiny for environmental performance and compliance. “Property investors face risks. Tenants will act and valuers will respond,” he says. He adds that as more green buildings come onto the market, they will start to get cheaper. “There is an increasing pressure to deliver. We have the need for accurate information. We’ve got to create monitoring and targets and need to be able to prove performance,” Hedley says.
The information in this article is courtesy of Jackie Cameron (“Making money in the new property era”, Realestateweb, 20 August 2008).
Property for sale in Noordhoek, False Bay.
Astute property developers, investors and entrepreneurs will no doubt already be aware of the next big era in the property, namely the profound impact that ‘green building’ practices are going to have on the industry in the foreseeable future. There are boundless business opportunities emerging as South Africa’s commercial property developers and investors join the bandwagon of what is fast-becoming a global phenomenon.
Building design is undergoing a transformation, moving away from work environments that are closed off from the outside world towards places of business designed to be at one with the natural surroundings. For instance, the power-draining air conditioners so often found in high-rise buildings and the shimmering glass towers that trap heat are set to become a thing of the past, as landlords and tenants demand real estate more reliant on renewable energy and reusable materials.
The recent IPD/Sapoa Property Investment Conference held in Cape Town recently focused primarily on the global trend towards constructing and refurbishing buildings along environmentally friendly lines. Delegates were informed that commercial property and the world’s airlines are two of the major contributors towards the production of dangerous carbon gas emissions destroying the earth’s ozone layer and as a result, contributing to the ever-looming global warming.
The South African real estate industry has only recently begun adopting green building standards, but the movement is expected to gain momentum. The Green Star Rating System is currently being introduced and although the ratings are not compulsory, pressure is anticipated to come from corporates, particularly those with international shareholders who want to be seen as socially and environmentally responsible.
According to the chairman of the Green Building Council of SA, Bruce Kerswill, “We in South Africa haven’t felt the sense of urgency on this yet. But we can expect to see stakeholder and government pressure here soon. South Africa has agreed to cut carbon emissions”. While some may not be inspired by the moral aspect, there is certainly a compelling business case for the greener option, with research showing that productivity can increase from about 5% to 15% with employees who work in a ‘green’ building.
Like all the healthier things in life, green buildings do tend to be on the expensive side when it comes to building and ultimately renting, however the cost is not quite as much as one might expect. For instance, in Australia a four-star building would cost the same as a non-green building in capital costs, while a five-star building requires more technology and would be around 5% extra in total cost. At 11% more for a six-star building, Kerswill believes this is “not a huge premium” to pay.
Buildings that promote the use of public transport rather than the use of private vehicles by being situated close to major transport nodes or because smaller cars get the best parking will earn more points than those that don’t. There is a huge emphasis on recycling and points are earned for sourcing local products rather than importing cheaper ones from elsewhere. There is another category that rewards “innovation” and this aims to “stimulate out of the box thinking” rather than simply adhering to the ratings.
Kerswill insists that this is not just a passing fad. Development director at Old Mutual Investment Group Property Investments, Brent Wilshire says that his organization has looked at their “top eight” buildings in a bid to identify areas to “make a difference”. He also produced some interesting figures indicating the extent to which these buildings ‘guzzle natural resources’. Just a 20% reduction in water use at these buildings alone would conserve enough water to fill 133 swimming pools every day.
“The important thing is you need to be able to measure then you can set targets,” Wiltshire says, highlighting the value of a green building rating system. “In our new assets, the green building principles are best practice. What is important is to get the right team in place. It’s about putting the philosophy in place upfront and making sure the team buys into it – it’s about an attitude”.
Managing director of IPD Occupiers and Management in the UK, Christopher Hedley indicates that corporate property will come under increased pressure and scrutiny for environmental performance and compliance. “Property investors face risks. Tenants will act and valuers will respond,” he says. He adds that as more green buildings come onto the market, they will start to get cheaper. “There is an increasing pressure to deliver. We have the need for accurate information. We’ve got to create monitoring and targets and need to be able to prove performance,” Hedley says.
The information in this article is courtesy of Jackie Cameron (“Making money in the new property era”, Realestateweb, 20 August 2008).
Property for sale in Noordhoek, False Bay.
Friday, August 15, 2008
The Latest on Interest Rates in South Africa
Tito's property crash "cushion"
Realestateweb.co.za reporter
14 August 2008
Interest rates remain on hold, but property market has "yet to bottom", warns bank.
SA Reserve Bank governor Tito Mboweni's announcement on Thursday that the key monetary policy interest rate will be left where it is for now, at 12%, is good news for debt-burdened consumers in general.
But those businesses relying on renewed enthusiasm for consumer spending - particularly in the residential real estate sector - shouldn't break out the Champagne just yet.
Property prices and levels of activity in the residential market are expected to get worse and are unlikely to pick up until the middle part of next year, is the prediction from Absa's senior property analyst Jacques du Toit.
Shortly after Mboweni's announcement, Du Toit issued a note cautioning that the "residential market has yet to bottom".
He said the "severe financial strain" caused by surging inflation, higher interest rates and declining real household disposable income growth would continue to negatively influence the affordability of housing. That in turn means less demand for housing.
The prime interest rate charged to the average bank customer is around 15% - about 5% higher than two years ago and has had the effect of pushing up home loan repayments by more than 35%.
"In real terms house prices are expected to decline for the first time this year since 1999, with the possibility of another real price drop in 2009," said the property expert.
"With economic conditions expected to improve in the second half of next year on the back of declining inflation and interest rates, the residential property market is set to recover shortly afterwards," added Du Toit.
Other market watchers are more optimistic, with the expectation in some quarters that buyers who have been waiting on the sidelines to purchase homes will do so soon, now that it looks like interest rates may have peaked or are close to peaking.
Provided there are no more economic shocks - like even higher oil prices - South Africa can expect interest rates to start ticking down from the end of the year, as has been predicted by top economist Cees Bruggemans of FNB (read Interest rates to fall fast - top economist).
Many consumers will be relieved that their debt repayments have not been increased yet again from unbearable levels
Mboweni warned, though, when he announced his decision to keep the repo rate at 12%, that "we're not out of the woods yet" when it comes to various economic "risks".
He cited the "subdued" housing market as well as a dramatic drop-off in sales in car sales among the reasons for his decision to keep rates where they are.
Herschel Jawitz, chief executive officer of Jawitz Properties, said: "While the decision will obviously not give any relief to homeowners who remain under financial pressure, it will certainly start to stem the tide of falling sentiment.
"Recently, there has been some good news with a drop in the petrol price, a stay on rates, no power outages and the possibility of a settlement in Zimbabwe. This is a far cry from where we were four months ago," he said.
Jawitz noted that, aside from the financial factors like interest rates and consumer prices, sentiment plays a huge part in the residential market.
"We may be nearing the bottom of the property market. It's not certain when the turn will come but at least we will have bottomed out," he added.
Jenny Dugmore, director of Colliers Residential Dugmore, agreed, saying: "This signifies the beginning of an economic turnaround, and will have a significant impact on sentiment."
Jeanne van Jaarsveldt, marketing and finance director of RE/MAX of South Africa, described the interest rate decision as the "first, but small, step toward a property market recovery."
He expects "little effect" on property sales but "does believe it will "lift some of the clouds overhanging property sales and introduce much needed rebuilding of confidence in property ownership, especially among investors".
"The coupling of still too high interest rates and tight credit restrictions will continue to hamstring first time buyers," said Van Jaarsveldt.
Dr Andrew Golding, chief executive officer of the Pam Golding Property Group, said: "From a residential property market perspective it is evident that while the National Credit Act has bedded down in terms of curbing credit, it takes quite some length of time for the stringent measures of higher interest rates to filter through and take effect."
It is likely, added Golding, "that we shall still be experiencing these (effects) for some time to come".
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.noordhoekproperties.co.za or www.coastalrealestate.co.za.
Realestateweb.co.za reporter
14 August 2008
Interest rates remain on hold, but property market has "yet to bottom", warns bank.
SA Reserve Bank governor Tito Mboweni's announcement on Thursday that the key monetary policy interest rate will be left where it is for now, at 12%, is good news for debt-burdened consumers in general.
But those businesses relying on renewed enthusiasm for consumer spending - particularly in the residential real estate sector - shouldn't break out the Champagne just yet.
Property prices and levels of activity in the residential market are expected to get worse and are unlikely to pick up until the middle part of next year, is the prediction from Absa's senior property analyst Jacques du Toit.
Shortly after Mboweni's announcement, Du Toit issued a note cautioning that the "residential market has yet to bottom".
He said the "severe financial strain" caused by surging inflation, higher interest rates and declining real household disposable income growth would continue to negatively influence the affordability of housing. That in turn means less demand for housing.
The prime interest rate charged to the average bank customer is around 15% - about 5% higher than two years ago and has had the effect of pushing up home loan repayments by more than 35%.
"In real terms house prices are expected to decline for the first time this year since 1999, with the possibility of another real price drop in 2009," said the property expert.
"With economic conditions expected to improve in the second half of next year on the back of declining inflation and interest rates, the residential property market is set to recover shortly afterwards," added Du Toit.
Other market watchers are more optimistic, with the expectation in some quarters that buyers who have been waiting on the sidelines to purchase homes will do so soon, now that it looks like interest rates may have peaked or are close to peaking.
Provided there are no more economic shocks - like even higher oil prices - South Africa can expect interest rates to start ticking down from the end of the year, as has been predicted by top economist Cees Bruggemans of FNB (read Interest rates to fall fast - top economist).
Many consumers will be relieved that their debt repayments have not been increased yet again from unbearable levels
Mboweni warned, though, when he announced his decision to keep the repo rate at 12%, that "we're not out of the woods yet" when it comes to various economic "risks".
He cited the "subdued" housing market as well as a dramatic drop-off in sales in car sales among the reasons for his decision to keep rates where they are.
Herschel Jawitz, chief executive officer of Jawitz Properties, said: "While the decision will obviously not give any relief to homeowners who remain under financial pressure, it will certainly start to stem the tide of falling sentiment.
"Recently, there has been some good news with a drop in the petrol price, a stay on rates, no power outages and the possibility of a settlement in Zimbabwe. This is a far cry from where we were four months ago," he said.
Jawitz noted that, aside from the financial factors like interest rates and consumer prices, sentiment plays a huge part in the residential market.
"We may be nearing the bottom of the property market. It's not certain when the turn will come but at least we will have bottomed out," he added.
Jenny Dugmore, director of Colliers Residential Dugmore, agreed, saying: "This signifies the beginning of an economic turnaround, and will have a significant impact on sentiment."
Jeanne van Jaarsveldt, marketing and finance director of RE/MAX of South Africa, described the interest rate decision as the "first, but small, step toward a property market recovery."
He expects "little effect" on property sales but "does believe it will "lift some of the clouds overhanging property sales and introduce much needed rebuilding of confidence in property ownership, especially among investors".
"The coupling of still too high interest rates and tight credit restrictions will continue to hamstring first time buyers," said Van Jaarsveldt.
Dr Andrew Golding, chief executive officer of the Pam Golding Property Group, said: "From a residential property market perspective it is evident that while the National Credit Act has bedded down in terms of curbing credit, it takes quite some length of time for the stringent measures of higher interest rates to filter through and take effect."
It is likely, added Golding, "that we shall still be experiencing these (effects) for some time to come".
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.noordhoekproperties.co.za or www.coastalrealestate.co.za.
Wednesday, August 13, 2008
FNB Responds to Ombudsman's Public Criticism
FNB Discusses Reasons for Withdrawal of Home Loan Approvals
Recently, it was reported that the Ombudsman for Banking Services fired a warning shot at FNB for its decision to withdraw home loan approvals on a large scale. An article by Realestateweb discusses the bank’s reaction to a “frank” meeting with the Ombudsman, in a bid to clarify which home loans are to be pulled.
A Big Four bank, FNB has assured developers that it will try and help those who are in financial trouble as it withdraws loan approvals for properties under construction. It also said that it will not reassess recently approved home loans that would normally take three to four months to register.
These assurances come in the wake of a “frank” meeting with the Banking Ombudsman, who recently fired a public warning at the bank, which has largely been seen as an unprecedented move. FNB’s decision to withdraw home loans on a large scale, as reported in an earlier article, will have major implications for developers, intermediaries and other players in the residential property industry.
After meeting with the Ombudsman, advocate Clive Pillay, the bank said that its “original statement on its reassessment decision may not have been clear and may have inadvertently caused unnecessary confusion and concern”. It went on to say that FNB and Pillay have since “agreed that the bank’s criteria, as now spelt out, for reassessing home loans approved in principle more than a year ago are ‘fair and equitable’”.
According to FNB, the home loan applications to be reassessed are those that take up to a year or longer to register and are of a development-type nature (excluding building bonds), not those that usually take three to four months for transfer and registration. Its intention is to “prevent customers from taking on more debt they are unable to service, resulting in an over-indebtedness position”.
The bank will only reassess applications should the following criteria apply:
- Where FNB guarantees have not already been issued;
- Any judgments or defaults evident with credit bureaus arise between the original granting of the home loan and prior to registration of the property;
- Customers confirm they are unable to afford the home loan subsequent to the original approval.
Each home loan will be reassessed “on a one-on-one basis with the intention of granting final approval for as many of the affected customers as possible. The bank will only decline applicants in cases where the client will be severely over-indebted should the transaction go ahead,” the bank said.
Customers who failed to provide their updated financial information are required to confirm their intention to go forward with the deal, otherwise FNB will contact each of the identified customers with the intention to proceed with the home loan, unless any of the above criteria are applicable.
Also, FNB is aware of the “impact its decision may have on any one developer and their financial institutions and will accordingly engage with them to find an amicable solution to mitigate any undue losses that may arise”.
The information in this article is courtesy of Realestateweb (“FNB: most new home loans “safe”, 12 August 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.capetownpropertyinfo.co.za or www.falsebayproperty.co.za.
Recently, it was reported that the Ombudsman for Banking Services fired a warning shot at FNB for its decision to withdraw home loan approvals on a large scale. An article by Realestateweb discusses the bank’s reaction to a “frank” meeting with the Ombudsman, in a bid to clarify which home loans are to be pulled.
A Big Four bank, FNB has assured developers that it will try and help those who are in financial trouble as it withdraws loan approvals for properties under construction. It also said that it will not reassess recently approved home loans that would normally take three to four months to register.
These assurances come in the wake of a “frank” meeting with the Banking Ombudsman, who recently fired a public warning at the bank, which has largely been seen as an unprecedented move. FNB’s decision to withdraw home loans on a large scale, as reported in an earlier article, will have major implications for developers, intermediaries and other players in the residential property industry.
After meeting with the Ombudsman, advocate Clive Pillay, the bank said that its “original statement on its reassessment decision may not have been clear and may have inadvertently caused unnecessary confusion and concern”. It went on to say that FNB and Pillay have since “agreed that the bank’s criteria, as now spelt out, for reassessing home loans approved in principle more than a year ago are ‘fair and equitable’”.
According to FNB, the home loan applications to be reassessed are those that take up to a year or longer to register and are of a development-type nature (excluding building bonds), not those that usually take three to four months for transfer and registration. Its intention is to “prevent customers from taking on more debt they are unable to service, resulting in an over-indebtedness position”.
The bank will only reassess applications should the following criteria apply:
- Where FNB guarantees have not already been issued;
- Any judgments or defaults evident with credit bureaus arise between the original granting of the home loan and prior to registration of the property;
- Customers confirm they are unable to afford the home loan subsequent to the original approval.
Each home loan will be reassessed “on a one-on-one basis with the intention of granting final approval for as many of the affected customers as possible. The bank will only decline applicants in cases where the client will be severely over-indebted should the transaction go ahead,” the bank said.
Customers who failed to provide their updated financial information are required to confirm their intention to go forward with the deal, otherwise FNB will contact each of the identified customers with the intention to proceed with the home loan, unless any of the above criteria are applicable.
Also, FNB is aware of the “impact its decision may have on any one developer and their financial institutions and will accordingly engage with them to find an amicable solution to mitigate any undue losses that may arise”.
The information in this article is courtesy of Realestateweb (“FNB: most new home loans “safe”, 12 August 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.capetownpropertyinfo.co.za or www.falsebayproperty.co.za.
Sunday, August 10, 2008
South Africa Going Green
An Engineering News article has drawn attention to the recent trend in South Africa where property investors are set to place more emphasis on green building. This comes after the United Nations identified property development as one of the primary contributors to global warming.
According to the UN, buildings consume between 40% and 50% of the world’s energy, 30% of raw materials and 20% of its water resources. However, it has also been identified as the one sector that has the potential to make the biggest impact on reducing energy consumption.
The adoption of green building practices, such as water recycling, solar heating, more energy-efficient air conditioning systems, could reduce energy consumption from 30% up to 70%. The property development sector’s unique position to effectively reduce the effects of climate change suggests that corporate property will now come under increased scrutiny for environmental performance.
IPD Occupiers UK director, Christopher Hedley addressed delegates at the sixth annual IPD/Sapoa Property Investment Conference held in Cape Town last week and explained that not many property investors were now tackling the issue of green building, as they placed more emphasis on investment returns than environmental sustainability.
In fact, statistics revealed that just half of property investment companies in South Africa were addressing the issue of climate change and green building. However, things are soon to change, as property investors will begin to receive pressure for greener buildings from tenants, governments and stakeholders, pushing them to integrate environmental sustainability into their future investment projects.
Old Mutual Property Investments business development executive, Brent Wilshire agreed with Hedley and argued that investors should think of climate change as a market transition, rather than an environmental issue. He added that it was essential for property investors to integrate green building practices into their investment portfolios because energy and utility costs are set to “explode”, infrastructure will be scarcer and the South African government may introduce green legislation in the future.
The green building initiative has been gathering momentum around the globe for the past five years. According to Bruce Kerswill, executive chairperson of the Green Building Council of South Africa, the real impetus for this initiative has been global warming. South Africa has not received the same pressure as other world nations to tackle the issue and is thus lagging behind the rest of the world in terms of implementing green building practices.
The recent electricity supply crisis in the country has given the green building movement in South Africa a push in the right direction, as this has forced property owners to seek out new ways of conserving energy in building techniques. Another factor playing an important role is that large multinational tenants have now started to demand environmentally friendly buildings and are willing to pay a premium to lease them, said Kerswill.
Also, Kerswill explained that the growing operational costs of transitional buildings have ensured that green building continues to gain in popularity. The operational costs of green buildings are significantly less, which is due to the lower electricity and water consumption, so the construction of such buildings is increasingly being seen as a better alternative in the long term.
The information in this article is courtesy of Jade Davenport (“Property investors urged to place more emphasis on green building”, Engineering News, 8 August 2008).
Visit www.noordhoekproperties.co.za or www.scarboroughproperty.co.za if you would like to buy or sell property in Cape Town's False Bay area.
According to the UN, buildings consume between 40% and 50% of the world’s energy, 30% of raw materials and 20% of its water resources. However, it has also been identified as the one sector that has the potential to make the biggest impact on reducing energy consumption.
The adoption of green building practices, such as water recycling, solar heating, more energy-efficient air conditioning systems, could reduce energy consumption from 30% up to 70%. The property development sector’s unique position to effectively reduce the effects of climate change suggests that corporate property will now come under increased scrutiny for environmental performance.
IPD Occupiers UK director, Christopher Hedley addressed delegates at the sixth annual IPD/Sapoa Property Investment Conference held in Cape Town last week and explained that not many property investors were now tackling the issue of green building, as they placed more emphasis on investment returns than environmental sustainability.
In fact, statistics revealed that just half of property investment companies in South Africa were addressing the issue of climate change and green building. However, things are soon to change, as property investors will begin to receive pressure for greener buildings from tenants, governments and stakeholders, pushing them to integrate environmental sustainability into their future investment projects.
Old Mutual Property Investments business development executive, Brent Wilshire agreed with Hedley and argued that investors should think of climate change as a market transition, rather than an environmental issue. He added that it was essential for property investors to integrate green building practices into their investment portfolios because energy and utility costs are set to “explode”, infrastructure will be scarcer and the South African government may introduce green legislation in the future.
The green building initiative has been gathering momentum around the globe for the past five years. According to Bruce Kerswill, executive chairperson of the Green Building Council of South Africa, the real impetus for this initiative has been global warming. South Africa has not received the same pressure as other world nations to tackle the issue and is thus lagging behind the rest of the world in terms of implementing green building practices.
The recent electricity supply crisis in the country has given the green building movement in South Africa a push in the right direction, as this has forced property owners to seek out new ways of conserving energy in building techniques. Another factor playing an important role is that large multinational tenants have now started to demand environmentally friendly buildings and are willing to pay a premium to lease them, said Kerswill.
Also, Kerswill explained that the growing operational costs of transitional buildings have ensured that green building continues to gain in popularity. The operational costs of green buildings are significantly less, which is due to the lower electricity and water consumption, so the construction of such buildings is increasingly being seen as a better alternative in the long term.
The information in this article is courtesy of Jade Davenport (“Property investors urged to place more emphasis on green building”, Engineering News, 8 August 2008).
Visit www.noordhoekproperties.co.za or www.scarboroughproperty.co.za if you would like to buy or sell property in Cape Town's False Bay area.
Thursday, August 7, 2008
South African Building Soon to Go Green
SA Soon to Have Green Star Rating Tool
An Engineering News article draws attention to the expected launch of South Africa’s green building rating tool in Cape Town in November. The Green Star rating tool will be launched at the inaugural Green Building Council of South Africa (GBCSA) convention and exhibition.
The rating tool applies to green building in offices and will be followed by specific tools that apply to retail, multi-unit residential and other building types, in order of market demand. Part of the GBCSA’s mandate is the running of its first Green Star SA Accredited Professional Course on November 5 this year, which is after the close of the main convention.
Established in 2007, the GBCSA recently launched for general membership and is an emerging member of the World Green Building Council. The council’s mission is the promotion of green building practice, to act as a resource centre for the industry, the development and operation of the green building rating system and the provision of training and education to ensure developers and investors are quickly brought up to speed on the various practices, this according to Bruce Kerswill, chairperson for the GBCSA.
The Green Star rating tools have been adapted from the rating system in Australia and similar tools have marked the mainstream adoption of green building in a number of markets overseas, which would be a crucial step in the GBCSA’s mission in South Africa, the council indicated.
The accreditation of new and refurbished developments in line with green building practices is a challenge that has already been taken up by property developers and investors around the globe, which is due largely to the demand from tenants for more productive spaces.
According to Kerswill, “The challenge to the South African commercial and industrial development industry is to see how quickly and effectively they are able to embrace the need for green accreditation”. The council noted that, “Detailed, practical guidance on green building techniques will also be showcased as a key element of the convention, using both local and international case studies”.
There are a number of international speakers lined up for the convention, including Che Wall, past chairperson of the World Green Building Council and managing director of Lincolne Scott, a building services consultancy practicing in Australia and Asia Pacific; Richard Fedrizzi, president, CEO and founding chairperson of the US Green Building Council; as well as Andrew Borger, managing director of Leighton Properties, who will have key members of his consulting team to present a case study on the 5 Star Green Star project in Queensland.
Speakers specializing locally include Indresen Pillay, managing director of Davis Langdon SA and a member of the same company’s global international Sustainability Group, who is scheduled to discuss the costs involved with green building. The GBCSA will also present a range of green building technologies, products and services, alongside the convention.
The information in this article is courtesy of Christy van der Merwe (“Green building rating tool to be launched in November”, Engineering News, 5 August 2008).
Visit www.simonstownproperties.co.za or www.noordhoekproperties.co.za if you would like to buy or sell property in Cape Town's False Bay region.
An Engineering News article draws attention to the expected launch of South Africa’s green building rating tool in Cape Town in November. The Green Star rating tool will be launched at the inaugural Green Building Council of South Africa (GBCSA) convention and exhibition.
The rating tool applies to green building in offices and will be followed by specific tools that apply to retail, multi-unit residential and other building types, in order of market demand. Part of the GBCSA’s mandate is the running of its first Green Star SA Accredited Professional Course on November 5 this year, which is after the close of the main convention.
Established in 2007, the GBCSA recently launched for general membership and is an emerging member of the World Green Building Council. The council’s mission is the promotion of green building practice, to act as a resource centre for the industry, the development and operation of the green building rating system and the provision of training and education to ensure developers and investors are quickly brought up to speed on the various practices, this according to Bruce Kerswill, chairperson for the GBCSA.
The Green Star rating tools have been adapted from the rating system in Australia and similar tools have marked the mainstream adoption of green building in a number of markets overseas, which would be a crucial step in the GBCSA’s mission in South Africa, the council indicated.
The accreditation of new and refurbished developments in line with green building practices is a challenge that has already been taken up by property developers and investors around the globe, which is due largely to the demand from tenants for more productive spaces.
According to Kerswill, “The challenge to the South African commercial and industrial development industry is to see how quickly and effectively they are able to embrace the need for green accreditation”. The council noted that, “Detailed, practical guidance on green building techniques will also be showcased as a key element of the convention, using both local and international case studies”.
There are a number of international speakers lined up for the convention, including Che Wall, past chairperson of the World Green Building Council and managing director of Lincolne Scott, a building services consultancy practicing in Australia and Asia Pacific; Richard Fedrizzi, president, CEO and founding chairperson of the US Green Building Council; as well as Andrew Borger, managing director of Leighton Properties, who will have key members of his consulting team to present a case study on the 5 Star Green Star project in Queensland.
Speakers specializing locally include Indresen Pillay, managing director of Davis Langdon SA and a member of the same company’s global international Sustainability Group, who is scheduled to discuss the costs involved with green building. The GBCSA will also present a range of green building technologies, products and services, alongside the convention.
The information in this article is courtesy of Christy van der Merwe (“Green building rating tool to be launched in November”, Engineering News, 5 August 2008).
Visit www.simonstownproperties.co.za or www.noordhoekproperties.co.za if you would like to buy or sell property in Cape Town's False Bay region.
Monday, August 4, 2008
Things to Know Before You Buy Property
Owning Property Can Be Expensive
An article published on the property iafrica website indicates that the there is more than meets the eye when it comes to owning property. The current gap between asking prices and selling prices continues to widen, but while this may create more value for money investment opportunities in the residential property market, it does not necessarily mean that you can afford to buy that dream home. This is because the cost of home ownership could be a lot more than you might think.
Marketing director at Betterbond, Deon Lessing says that many people renting property often think that they could easily buy a home and pay the money that would have gone towards rent as their monthly bond. “But what prospective buyers need to understand is that the true cost of home ownership involves a lot more than just a monthly bond payment,” he adds. “Underestimating the true costs of owning and maintaining a house and the land on which it sits is one mistake first-time buyers often make,” Lessing asserts.
Putting interest rate increases aside; there are a number of expenses that homeowners need to take into consideration:
Homeowners insurance: This is a prerequisite when it comes to applying for a home loan. Homeowners insurance cover (HOC) protects owners of property from damage caused to the actual building and all the fixtures and fittings therein. The cover includes fire damage, lightning, explosions, storms, earthquakes, water, hail and even accidental damage to sinks, toilet bowls or other sanitary ware.
Rates and taxes/levies: Homes that are free-standing are subject to rates and taxes determined by the municipality, which cover the collection of rubbish, electricity and water, while sectional title units or complexes charge each unit a levy to cover these costs. Often these levies may include water, but exclude electricity.
Household contents insurance: While this form of insurance is optional, it covers all your personal belongings contained in your home and with the ever-increasing level of crime in South Africa, many households opt for this kind of insurance cover.
Security: Putting in burglar bars or paying an alarm company to fit a security system linked to armed response is considered a necessity, even if your home is located within a security complex.
Maintenance costs: When you own a home, it becomes your responsibility to take care of all the repair work and maintenance costs. There will no longer be a landlord to help you on this. While the cost of maintaining your home may vary depending on the size, Lessing suggests that putting aside R1000 a month is generally a good average amount. Remember that if you do not keep up with the maintenance then the costs could grow exponentially. A house that is in less than perfect condition tends to be on the market longer and sells for less than a house that has been impeccably maintained. Other areas of a home that require maintenance include the garden, swimming pool, painting, carpet repair and replacement, as well as other incidentals that are bound to come up through the ownership cycle.
According to Lessing, “When calculating your total cost of home ownership, you should add up to 40 percent to your base bond payment and that is the amount that you will eventually have to pay. The best way to be ready for the cost of owning and maintaining your home is to plan for it”.
The information in this article is courtesy of Property iAfrica (“True cost of ownership”, 4 August 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
An article published on the property iafrica website indicates that the there is more than meets the eye when it comes to owning property. The current gap between asking prices and selling prices continues to widen, but while this may create more value for money investment opportunities in the residential property market, it does not necessarily mean that you can afford to buy that dream home. This is because the cost of home ownership could be a lot more than you might think.
Marketing director at Betterbond, Deon Lessing says that many people renting property often think that they could easily buy a home and pay the money that would have gone towards rent as their monthly bond. “But what prospective buyers need to understand is that the true cost of home ownership involves a lot more than just a monthly bond payment,” he adds. “Underestimating the true costs of owning and maintaining a house and the land on which it sits is one mistake first-time buyers often make,” Lessing asserts.
Putting interest rate increases aside; there are a number of expenses that homeowners need to take into consideration:
Homeowners insurance: This is a prerequisite when it comes to applying for a home loan. Homeowners insurance cover (HOC) protects owners of property from damage caused to the actual building and all the fixtures and fittings therein. The cover includes fire damage, lightning, explosions, storms, earthquakes, water, hail and even accidental damage to sinks, toilet bowls or other sanitary ware.
Rates and taxes/levies: Homes that are free-standing are subject to rates and taxes determined by the municipality, which cover the collection of rubbish, electricity and water, while sectional title units or complexes charge each unit a levy to cover these costs. Often these levies may include water, but exclude electricity.
Household contents insurance: While this form of insurance is optional, it covers all your personal belongings contained in your home and with the ever-increasing level of crime in South Africa, many households opt for this kind of insurance cover.
Security: Putting in burglar bars or paying an alarm company to fit a security system linked to armed response is considered a necessity, even if your home is located within a security complex.
Maintenance costs: When you own a home, it becomes your responsibility to take care of all the repair work and maintenance costs. There will no longer be a landlord to help you on this. While the cost of maintaining your home may vary depending on the size, Lessing suggests that putting aside R1000 a month is generally a good average amount. Remember that if you do not keep up with the maintenance then the costs could grow exponentially. A house that is in less than perfect condition tends to be on the market longer and sells for less than a house that has been impeccably maintained. Other areas of a home that require maintenance include the garden, swimming pool, painting, carpet repair and replacement, as well as other incidentals that are bound to come up through the ownership cycle.
According to Lessing, “When calculating your total cost of home ownership, you should add up to 40 percent to your base bond payment and that is the amount that you will eventually have to pay. The best way to be ready for the cost of owning and maintaining your home is to plan for it”.
The information in this article is courtesy of Property iAfrica (“True cost of ownership”, 4 August 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Thursday, July 31, 2008
Judge Rules in Favour of SA Farmer
Landmark Case for Property Rights
An article published on the IOL website discusses the results of what some are calling a landmark case for South African farmers and other citizens with business interests in crisis torn Zimbabwe. On Tuesday, the Pretoria High Court ruled in favour of a Bothaville farmer who lost a number of farms and businesses in Zimbabwe due to the ongoing political upheaval.
The Judge, Bill Prinsloo, ruled that Crawford von Abo had the right to diplomatic protection of his assets in Zimbabwe from the South African government, specifically regarding the violation of his rights by the Zimbabwean government. Prinsloo also ruled that the government had 60 days to remedy the situation and report back to the court regarding the steps taken to restore his rights in Zimbabwe.
Von Abo has been struggling for more than six years to get the South African government to act against the Zimbabwean government’s confiscation of land owned by South African citizens. Up until now, his pleas have fallen on deaf ears and von Abo’s counsel told the court that his efforts to obtain help from the government were like “the Yellow Brick Road – the road to nowhere”.
According to von Abo, in 1997 the Zimbabwean government violated his rights by destroying his property interests in a number of farms in the country, which occurred as part of its national policy to expropriate white-owned farms. To this end, he was not paid compensation for his loss.
Judge Prinsloo said he regretted how difficult it had been to resist the conclusion that “the respondents (government) were simply stringing the application along and never had any serious intention to afford him proper protection”.
Prinsloo went on to say, “Their feeble efforts, if any, amounted to little more than quiet acquiescence in the conduct of their Zimbabwean counterparts and their ‘war-veteran’ thugs”. According to the judge, von Abo had demonstrated that his rightful property in Zimbabwe was unlawfully expropriated under international law and that he had not been compensated for it.
Von Abo’s attempts to protect his interests by suing the Zimbabwean government within the country had proved futile. Prinsloo said that given the state of the country’s legal system and the government’s disregard for the orders of its own courts, particularly in light of expropriation, no more remedies were available to him.
Prinsloo added that the South African government had dealt with the von Abo matter in bad faith and irrationally. “For six years or more, in the face of a stream of urgent requests – they (government) did absolutely nothing to bring about relief to the applicant and hundreds of other white commercial farmers in the same position. Their ‘assistance’ was limited to empty promises”.
He went on to say, “They (government) exhibited neither the will nor the ability to do anything constructive to bring their northern neighbour to book. They paid no regard, of any consequence, to the plight of valuable citizens such as the applicant with a 50-year track record in Zimbabwe and other hard-working white commercial farmers making a substantial contribution to the GDP in Zimbabwe and providing thousands of people with work in that country”.
The judge thus concluded that von Abo qualified for diplomatic protection from the South African government, which “may involve effective diplomatic pressure on the Zimbabwean government to restore the properties to the applicant and his companies and to pay compensation for losses and damages”.
As part of the ruling, Prinsloo indefinitely postponed von Abo’s claim for damages against the government regarding the farms and business interests he had lost in Zimbabwe. Von Abo indicated during the trial that the conservative total in damages pertaining to his six farms, including the implements and other assets lost, amounted to around R60 million.
According to Ernst Penzhorn, von Abo’s lawyer, in response to the verdict, his client indicated that he “is grateful that he could have turned to a court in his own country to protect his rights. This is comforting if one looks at how he was treated with no sympathy by members of the executive”.
Penzhorn said that the next step would be to approach the Constitutional Court to confirm the judgment. He said he believed that the decision would open the door for many South African citizens who lost business interests in neighbouring Zimbabwe. Regarding the claim for damages, he said that they would first see what the government’s response is before going any further.
The information in this article is courtesy of Zelda Venter (“Landmark win for SA farmer”, Pretoria News, 30 July 2008).
Visit www.simonstownproperties.co.za or www.fishhoekproperty.co.za if you would like to buy or sell property in Cape Town's False Bay area.
An article published on the IOL website discusses the results of what some are calling a landmark case for South African farmers and other citizens with business interests in crisis torn Zimbabwe. On Tuesday, the Pretoria High Court ruled in favour of a Bothaville farmer who lost a number of farms and businesses in Zimbabwe due to the ongoing political upheaval.
The Judge, Bill Prinsloo, ruled that Crawford von Abo had the right to diplomatic protection of his assets in Zimbabwe from the South African government, specifically regarding the violation of his rights by the Zimbabwean government. Prinsloo also ruled that the government had 60 days to remedy the situation and report back to the court regarding the steps taken to restore his rights in Zimbabwe.
Von Abo has been struggling for more than six years to get the South African government to act against the Zimbabwean government’s confiscation of land owned by South African citizens. Up until now, his pleas have fallen on deaf ears and von Abo’s counsel told the court that his efforts to obtain help from the government were like “the Yellow Brick Road – the road to nowhere”.
According to von Abo, in 1997 the Zimbabwean government violated his rights by destroying his property interests in a number of farms in the country, which occurred as part of its national policy to expropriate white-owned farms. To this end, he was not paid compensation for his loss.
Judge Prinsloo said he regretted how difficult it had been to resist the conclusion that “the respondents (government) were simply stringing the application along and never had any serious intention to afford him proper protection”.
Prinsloo went on to say, “Their feeble efforts, if any, amounted to little more than quiet acquiescence in the conduct of their Zimbabwean counterparts and their ‘war-veteran’ thugs”. According to the judge, von Abo had demonstrated that his rightful property in Zimbabwe was unlawfully expropriated under international law and that he had not been compensated for it.
Von Abo’s attempts to protect his interests by suing the Zimbabwean government within the country had proved futile. Prinsloo said that given the state of the country’s legal system and the government’s disregard for the orders of its own courts, particularly in light of expropriation, no more remedies were available to him.
Prinsloo added that the South African government had dealt with the von Abo matter in bad faith and irrationally. “For six years or more, in the face of a stream of urgent requests – they (government) did absolutely nothing to bring about relief to the applicant and hundreds of other white commercial farmers in the same position. Their ‘assistance’ was limited to empty promises”.
He went on to say, “They (government) exhibited neither the will nor the ability to do anything constructive to bring their northern neighbour to book. They paid no regard, of any consequence, to the plight of valuable citizens such as the applicant with a 50-year track record in Zimbabwe and other hard-working white commercial farmers making a substantial contribution to the GDP in Zimbabwe and providing thousands of people with work in that country”.
The judge thus concluded that von Abo qualified for diplomatic protection from the South African government, which “may involve effective diplomatic pressure on the Zimbabwean government to restore the properties to the applicant and his companies and to pay compensation for losses and damages”.
As part of the ruling, Prinsloo indefinitely postponed von Abo’s claim for damages against the government regarding the farms and business interests he had lost in Zimbabwe. Von Abo indicated during the trial that the conservative total in damages pertaining to his six farms, including the implements and other assets lost, amounted to around R60 million.
According to Ernst Penzhorn, von Abo’s lawyer, in response to the verdict, his client indicated that he “is grateful that he could have turned to a court in his own country to protect his rights. This is comforting if one looks at how he was treated with no sympathy by members of the executive”.
Penzhorn said that the next step would be to approach the Constitutional Court to confirm the judgment. He said he believed that the decision would open the door for many South African citizens who lost business interests in neighbouring Zimbabwe. Regarding the claim for damages, he said that they would first see what the government’s response is before going any further.
The information in this article is courtesy of Zelda Venter (“Landmark win for SA farmer”, Pretoria News, 30 July 2008).
Visit www.simonstownproperties.co.za or www.fishhoekproperty.co.za if you would like to buy or sell property in Cape Town's False Bay area.
Friday, July 25, 2008
Buyers Encouraged to Start Buying Property in Slow Market
Houses Not Selling Despite Low Prices
An article by Dispatch Online’s business correspondent, Xolile Bhengu has drawn attention to the fact that despite lower prices, houses are harder to sell. In fact, sellers are having to settle for far less than asking price and real estate agents are not optimistic about the market improving in the current quarter. This is according to First National Bank’s latest Residential Property Barometer.
The recent survey by FNB is yet another confirmation that the continued economic slowdown is putting pressure on homeowners. Based on perception, agents polled in the survey reported that houses in the greater Tshwane area and the Western Cape have been the slowest movers during the second quarter of 2008.
The FNB Property Barometer indicated that four out of five properties remained on the market for four months before reaching a sale. Despite the reduction in prices, at least 85% of sellers settled for less than the original asking price, which is up slightly on the first quarter. The sale of lower income housing worth less than R350 000 was stable in comparison, but still averaged about 11 weeks on the market.
FNB conducted the survey by interviewing 150 estate agents from across South Africa, many working for some of the top estate agencies. Property strategist for FNB Home Loans, John Loos said that rising interest rates was the top cause for the slowdown according to estate agents, but this also included uncertainty around the economy and the political climate in the country.
Emigration is said to have accounted for 18% of sales in the second quarter, which is up 12% from the previous quarter. 8% of buyers were said to be moving closer to their places of work. Loos added that the volume of properties on the market is not surprising, particularly in light of the ANC’s Polokwane conference in December last year, where Jacob Zuma was elected party president, the electricity crisis, the election shenanigans in neighbouring Zimbabwe and the recent xenophobic violence.
Loos said, “It must be taken into account that the negative sentiment on the South African outlook and the questions about leadership come largely from the minority population in former white suburbs. Even estate agents are feeling miserable. Only 15% of the respondents said they believed there would be a market turn in the next quarter”.
While analysts have said it is too soon to start investing in the market, Loos believes that this is a good time to buy and will get even better as time goes on. “Interest rates may be high now, but they also eventually go down. If you can afford to buy a property, the opportunity to buy looks good in the next quarter,” he said.
The information in this article is courtesy of Xolile Bhengu (“Houses harder to sell despite lower prices”, Dispatch Online, 22 July 2008).
If you would like to buy property in Cape Town's False Bay area, please visit www.capetownpropertyinfo.co.za.
An article by Dispatch Online’s business correspondent, Xolile Bhengu has drawn attention to the fact that despite lower prices, houses are harder to sell. In fact, sellers are having to settle for far less than asking price and real estate agents are not optimistic about the market improving in the current quarter. This is according to First National Bank’s latest Residential Property Barometer.
The recent survey by FNB is yet another confirmation that the continued economic slowdown is putting pressure on homeowners. Based on perception, agents polled in the survey reported that houses in the greater Tshwane area and the Western Cape have been the slowest movers during the second quarter of 2008.
The FNB Property Barometer indicated that four out of five properties remained on the market for four months before reaching a sale. Despite the reduction in prices, at least 85% of sellers settled for less than the original asking price, which is up slightly on the first quarter. The sale of lower income housing worth less than R350 000 was stable in comparison, but still averaged about 11 weeks on the market.
FNB conducted the survey by interviewing 150 estate agents from across South Africa, many working for some of the top estate agencies. Property strategist for FNB Home Loans, John Loos said that rising interest rates was the top cause for the slowdown according to estate agents, but this also included uncertainty around the economy and the political climate in the country.
Emigration is said to have accounted for 18% of sales in the second quarter, which is up 12% from the previous quarter. 8% of buyers were said to be moving closer to their places of work. Loos added that the volume of properties on the market is not surprising, particularly in light of the ANC’s Polokwane conference in December last year, where Jacob Zuma was elected party president, the electricity crisis, the election shenanigans in neighbouring Zimbabwe and the recent xenophobic violence.
Loos said, “It must be taken into account that the negative sentiment on the South African outlook and the questions about leadership come largely from the minority population in former white suburbs. Even estate agents are feeling miserable. Only 15% of the respondents said they believed there would be a market turn in the next quarter”.
While analysts have said it is too soon to start investing in the market, Loos believes that this is a good time to buy and will get even better as time goes on. “Interest rates may be high now, but they also eventually go down. If you can afford to buy a property, the opportunity to buy looks good in the next quarter,” he said.
The information in this article is courtesy of Xolile Bhengu (“Houses harder to sell despite lower prices”, Dispatch Online, 22 July 2008).
If you would like to buy property in Cape Town's False Bay area, please visit www.capetownpropertyinfo.co.za.
Tuesday, July 22, 2008
Investors Should Ride Out the Storm in SA
Keep Investing Say Experts
An article published on the Personal Finance website draws attention to concerns over the current downturn in the South African market and urges investors not to bail out just yet. You will lose the substantial gains of the past five years and this may seriously hamper your ability to retire financially secure.
The article likens the hammering being experienced by the property and equity markets in the current economic conditions to a war zone, suggesting that investors will most probably have to “keep their heads below the parapet for some time”. However, the equity and property experts are of the opinion that survival is possible if investors don’t panic and aren’t strangled by debt.
Prices of property and equity have been falling fast this year; with Standard Bank’s house price data reflecting a 9% drop in median house prices in the year to April. Equity markets, both local and foreign, have been in the spotlight since May, with the FTSE/JSE All Share Index (Alsi) down to 27 995 at the close of trade on Thursday, after having capped 33 000 in May.
Of course, the weakening of property and equity values this year has been impacted by the rising inflation rate. In factual terms, any nominal returns are reduced and any losses are increased by the loss of real value due to an inflation rate of 10.9% for the year to May.
Considering the previous five years of growth up until now though, most people don’t have to panic, as they have rarely seen it so good. As Paul Hansen of Stanlib puts it, investors in his company’s Small Cap Fund may have received a “huge klap” by the fund’s 40% drop from a record high last year, but the fund “is still triple the value it was in 2003”.
According to Rian le Roux, chief economist at Old Mutual, over the past five years investments in almost all sectors in South Africa have fared exceptionally well. The average annual return for unit trust funds in the domestic general equity sub-category has realized over 30% each year, while the ABSA house price index increased by 18% each year. Over the same period, inflation was stable at an annual average of 6%.
Essentially, this translates into a sharp growth in the wealth of most South Africans who invested in residential property and equity over the past five years, mainly through retirement funds, insurance policies and unit trusts. However, le Roux asserts that such high returns could not be sustained and the current slowdown was to be expected.
“Investors who invested in the past year or two are hurting, especially those who invested in financial and industrial shares,” says le Roux. He warns that during “bear markets”, investors “need to guard against any inclination to panic as they see their wealth falling”.
Instead of panicking prematurely, investors should rather remind themselves of the volatility of markets and that historically, those who have chosen to ride out the storm have been rewarded in the long term. Most asset managers are following their own advice and hanging in, even if their short term performance is negative, as they believe that the current volatility will reflect better pricing in the medium term.
Johan de Lange, director of South Africa’s top performing asset manager Allan Gray Investor Services, says that his company focuses on finding shares that offer basic value, with an investment horizon of at least four years. He adds that individuals should be considering long term investment objectives and “guard against acting irrationally”.
Trevor Pascoe, head of investment services at Old Mutual, says that many investors are tempted to move their money from equities to cash, even when their budgets are not really under pressure, simply because they are afraid the markets will continue to fall.
“Even investment professionals struggle to get market timing right on a regular basis. Investors who panic and disinvest from the market during downswings and reinvest during upswings usually destroy value. Smart investors realize the importance of continuing to invest through a dip, making the bear market work for them by picking up equities cheaply,” says Pascoe.
Le Roux insists that those facing difficulties in the current economic climate are people are entrenched too deeply in debt. He goes on to say that Old Mutual estimates that household debt interest repayments increased from 6% of household after-tax income at the end of 2003 to 11.5% currently.
His advice seems to be not to give into temptation and dip into your long term savings to see you through the rough times, as this may be beneficial in the short term, but in the long term it may leave you with insufficient funds for retirement. “If budgets are under pressure, you should rather try to reduce your monthly spending”.
According to Jeremy Gardiner, of Investec Asset Management, the two primary risk factors investors now face are being overweight in either commodities or cash. “While the long run commodity story is fundamentally sound, a significant correction within the next two years is quite possible. Commodities are an important part of any investment portfolio, but your exposure should be appropriate to your risk profile. Similarly, be careful of being overweight in cash for too long. The risk of being out of the market when it turns up is as high as the risk of being in when the markets turn down,” says Gardiner.
The information in this article is courtesy of Bruce Cameron (“Now is the wrong time to stop investing”, Personal Finance, 19 July 2008).
If you would like to buy or sell property in Cape Town's False Bay region, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
An article published on the Personal Finance website draws attention to concerns over the current downturn in the South African market and urges investors not to bail out just yet. You will lose the substantial gains of the past five years and this may seriously hamper your ability to retire financially secure.
The article likens the hammering being experienced by the property and equity markets in the current economic conditions to a war zone, suggesting that investors will most probably have to “keep their heads below the parapet for some time”. However, the equity and property experts are of the opinion that survival is possible if investors don’t panic and aren’t strangled by debt.
Prices of property and equity have been falling fast this year; with Standard Bank’s house price data reflecting a 9% drop in median house prices in the year to April. Equity markets, both local and foreign, have been in the spotlight since May, with the FTSE/JSE All Share Index (Alsi) down to 27 995 at the close of trade on Thursday, after having capped 33 000 in May.
Of course, the weakening of property and equity values this year has been impacted by the rising inflation rate. In factual terms, any nominal returns are reduced and any losses are increased by the loss of real value due to an inflation rate of 10.9% for the year to May.
Considering the previous five years of growth up until now though, most people don’t have to panic, as they have rarely seen it so good. As Paul Hansen of Stanlib puts it, investors in his company’s Small Cap Fund may have received a “huge klap” by the fund’s 40% drop from a record high last year, but the fund “is still triple the value it was in 2003”.
According to Rian le Roux, chief economist at Old Mutual, over the past five years investments in almost all sectors in South Africa have fared exceptionally well. The average annual return for unit trust funds in the domestic general equity sub-category has realized over 30% each year, while the ABSA house price index increased by 18% each year. Over the same period, inflation was stable at an annual average of 6%.
Essentially, this translates into a sharp growth in the wealth of most South Africans who invested in residential property and equity over the past five years, mainly through retirement funds, insurance policies and unit trusts. However, le Roux asserts that such high returns could not be sustained and the current slowdown was to be expected.
“Investors who invested in the past year or two are hurting, especially those who invested in financial and industrial shares,” says le Roux. He warns that during “bear markets”, investors “need to guard against any inclination to panic as they see their wealth falling”.
Instead of panicking prematurely, investors should rather remind themselves of the volatility of markets and that historically, those who have chosen to ride out the storm have been rewarded in the long term. Most asset managers are following their own advice and hanging in, even if their short term performance is negative, as they believe that the current volatility will reflect better pricing in the medium term.
Johan de Lange, director of South Africa’s top performing asset manager Allan Gray Investor Services, says that his company focuses on finding shares that offer basic value, with an investment horizon of at least four years. He adds that individuals should be considering long term investment objectives and “guard against acting irrationally”.
Trevor Pascoe, head of investment services at Old Mutual, says that many investors are tempted to move their money from equities to cash, even when their budgets are not really under pressure, simply because they are afraid the markets will continue to fall.
“Even investment professionals struggle to get market timing right on a regular basis. Investors who panic and disinvest from the market during downswings and reinvest during upswings usually destroy value. Smart investors realize the importance of continuing to invest through a dip, making the bear market work for them by picking up equities cheaply,” says Pascoe.
Le Roux insists that those facing difficulties in the current economic climate are people are entrenched too deeply in debt. He goes on to say that Old Mutual estimates that household debt interest repayments increased from 6% of household after-tax income at the end of 2003 to 11.5% currently.
His advice seems to be not to give into temptation and dip into your long term savings to see you through the rough times, as this may be beneficial in the short term, but in the long term it may leave you with insufficient funds for retirement. “If budgets are under pressure, you should rather try to reduce your monthly spending”.
According to Jeremy Gardiner, of Investec Asset Management, the two primary risk factors investors now face are being overweight in either commodities or cash. “While the long run commodity story is fundamentally sound, a significant correction within the next two years is quite possible. Commodities are an important part of any investment portfolio, but your exposure should be appropriate to your risk profile. Similarly, be careful of being overweight in cash for too long. The risk of being out of the market when it turns up is as high as the risk of being in when the markets turn down,” says Gardiner.
The information in this article is courtesy of Bruce Cameron (“Now is the wrong time to stop investing”, Personal Finance, 19 July 2008).
If you would like to buy or sell property in Cape Town's False Bay region, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Thursday, July 17, 2008
South Africa Entering Prime Time to Buy Property
Why Buyers Should Invest Now
An article published by the Daily Dispatch Online discusses the current trend in the property market and urges buyers that the time to invest in a fixed asset like property is about six months away, when the market finally hits rock bottom.
Many homeowners may refute this and say that it would be mad to touch property investments in a climate where house prices continue to fall. Why would anyone want to buy an asset that is steadily losing value?
Senior economic analyst at ABSA, Jacques du Toit said, “In real terms, property prices have already declined since late last year, which implies that, on average, a property owner who has bought property during the past two years is set to make no profit, or even a loss, if he sells now”.
On the back of a global economic slump, ABSA predicts real house price growth to fall by around 6% in 2008 and by another 3.3% in 2009. Du Toit anticipated that the best time to invest in property would be the second half of this year and early 2009, especially in terms of a buy-to-let perspective.
Marriott Income Specialists chief executive, Simon Pearse agreed that six months from now would be a prime time to invest in property, as prices still have to lose some momentum. “You need to buy when the interest rate is at its highest and inflation at its most. When no one wants to buy property, that is the best time to buy…and then you will make the most money,” according to Pearse.
He added that if property investors do not have cash reserves right now, they should try and convince their bank to loan them the maximum amount available under the tight conditions and purchase a bargain property. “You are not borrowing for the sake of borrowing, but buying an asset,” he urged, and the asset value will begin to rise just as interest rates start to fall.
Effectively, the situation created is one where the investor’s bond payments would decrease on an asset that continues to rise in value. When is the right time to leave the property market? The simple answer would be when interest rates start to rise again or when everyone at the local pub informs you what a great investment property is, said Pearse.
Taking this advice into account, Marriott developed the first commercial property fund for private investors in South Africa in 1997, when the property market was at its lowest ebb in the past twenty years. This fund recorded a 200% return on investment between 1997 and 2005, when the property boom began to taper off.
According to Pearse, property will always be a sound long-term investment because property values and rental income are linked to inflation, which means that prices continue to rise over time. During the first part of this year, rentals in East London increased by 50%, this according to the Trafalgar National Rental Index.
Du Toit warns that investors in the property market should not anticipate any positive real capital growth in the next 18 to 24 months. “In view of property being medium to longer-term investment – five years and longer – property investors should look through the current downward cycle and focus on income returns, with a view of achieving positive real capital appreciation from 2010,” he said.
The information in this article is courtesy of Roux van Zyl (“Buyers can benefit from property’s fall”, Daily Dispatch Online, 16 July 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
An article published by the Daily Dispatch Online discusses the current trend in the property market and urges buyers that the time to invest in a fixed asset like property is about six months away, when the market finally hits rock bottom.
Many homeowners may refute this and say that it would be mad to touch property investments in a climate where house prices continue to fall. Why would anyone want to buy an asset that is steadily losing value?
Senior economic analyst at ABSA, Jacques du Toit said, “In real terms, property prices have already declined since late last year, which implies that, on average, a property owner who has bought property during the past two years is set to make no profit, or even a loss, if he sells now”.
On the back of a global economic slump, ABSA predicts real house price growth to fall by around 6% in 2008 and by another 3.3% in 2009. Du Toit anticipated that the best time to invest in property would be the second half of this year and early 2009, especially in terms of a buy-to-let perspective.
Marriott Income Specialists chief executive, Simon Pearse agreed that six months from now would be a prime time to invest in property, as prices still have to lose some momentum. “You need to buy when the interest rate is at its highest and inflation at its most. When no one wants to buy property, that is the best time to buy…and then you will make the most money,” according to Pearse.
He added that if property investors do not have cash reserves right now, they should try and convince their bank to loan them the maximum amount available under the tight conditions and purchase a bargain property. “You are not borrowing for the sake of borrowing, but buying an asset,” he urged, and the asset value will begin to rise just as interest rates start to fall.
Effectively, the situation created is one where the investor’s bond payments would decrease on an asset that continues to rise in value. When is the right time to leave the property market? The simple answer would be when interest rates start to rise again or when everyone at the local pub informs you what a great investment property is, said Pearse.
Taking this advice into account, Marriott developed the first commercial property fund for private investors in South Africa in 1997, when the property market was at its lowest ebb in the past twenty years. This fund recorded a 200% return on investment between 1997 and 2005, when the property boom began to taper off.
According to Pearse, property will always be a sound long-term investment because property values and rental income are linked to inflation, which means that prices continue to rise over time. During the first part of this year, rentals in East London increased by 50%, this according to the Trafalgar National Rental Index.
Du Toit warns that investors in the property market should not anticipate any positive real capital growth in the next 18 to 24 months. “In view of property being medium to longer-term investment – five years and longer – property investors should look through the current downward cycle and focus on income returns, with a view of achieving positive real capital appreciation from 2010,” he said.
The information in this article is courtesy of Roux van Zyl (“Buyers can benefit from property’s fall”, Daily Dispatch Online, 16 July 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Sunday, July 13, 2008
Not All Doom and Gloom
There has been much debate centred around the persistent slump in the property market, with a range of experts going from one extreme to the next, some predicting that house prices will continue to drop, while others saying that the situation is merely a stagnation and not as bad as many make it out to be.
Whatever the case, the fact remains that sellers are having to settle for much less than asking price, with buyers able to literally shop around for the best deal. An article in the Weekend Post indicates that homeowners in the Cape are having to settle for up to 30% less on their homes, while 90% of sellers in Port Elizabeth are having to accept offers lower than asking price. The national average lies at 83%, according to FNB's property barometer.
Considering that the market is literally saturated at the moment, it's reasonable to assume that banks would be more inclined to help homeowners than repossess properties. South Africa is not the only country experiencing these difficulties. An inspection of the property markets in Australia and New Zealand will show much of the same pressures being felt by homeowners.
If you are selling your home then it's vital that it is priced realistically if you are to achieve a successful sale. Buyers are essentially controlling the current market, as they are putting in offers well below the asking price and walking away if the deal doesn't suit them financially. Those who aren't experiencing the pinch so acutely would do well to take advantage of the current market, as buyers are really spoilt for choice and bound to pick up a bargain. It's important to remember that property cycles are just that, what goes down must come up and vice versa.
Much of the information contained herein is courtesy of Melody Brandon ("Desperate times as house prices plummet", Weekend Post, 12 July 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.coastalrealestate.co.za or www.falsebayproperty.co.za.
Whatever the case, the fact remains that sellers are having to settle for much less than asking price, with buyers able to literally shop around for the best deal. An article in the Weekend Post indicates that homeowners in the Cape are having to settle for up to 30% less on their homes, while 90% of sellers in Port Elizabeth are having to accept offers lower than asking price. The national average lies at 83%, according to FNB's property barometer.
Considering that the market is literally saturated at the moment, it's reasonable to assume that banks would be more inclined to help homeowners than repossess properties. South Africa is not the only country experiencing these difficulties. An inspection of the property markets in Australia and New Zealand will show much of the same pressures being felt by homeowners.
If you are selling your home then it's vital that it is priced realistically if you are to achieve a successful sale. Buyers are essentially controlling the current market, as they are putting in offers well below the asking price and walking away if the deal doesn't suit them financially. Those who aren't experiencing the pinch so acutely would do well to take advantage of the current market, as buyers are really spoilt for choice and bound to pick up a bargain. It's important to remember that property cycles are just that, what goes down must come up and vice versa.
Much of the information contained herein is courtesy of Melody Brandon ("Desperate times as house prices plummet", Weekend Post, 12 July 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.coastalrealestate.co.za or www.falsebayproperty.co.za.
Monday, July 7, 2008
Downcycle in Property Market Continues
Negative Equity the Latest Risk
An article published on the Business Report website draws attention to the latest trend in the property market, where homeowners now face the risk of negative equity on their homes as house prices continue to drop.
Standard Bank’s median house price in June dropped by 11.3% year-on-year to R550 000, which only increases the possibility that some homeowners now owe more on their homes than they could sell them for. The moving average growth in median house prices over the last five months stands at minus 7.8%.
Standard Bank’s property economist, Sizwe Nxedlana has said that these negative numbers had been distorted somewhat by the surge in median house prices at the same time last year, ahead of the National Credit Act implementation.
This entire year, Standard Bank has recorded either flat or negative median house price growth. In January and February, the figures were at zero, with minus 5.2% registered in March, minus 8.6% in April and minus 13.2% recorded in May.
According to Nxedlana, declines of this magnitude and duration in the demand for property “are not inconsistent with national house price deflation”. He added that negative equity in mortgage bonds was now a possibility, particularly for those who bought houses at the peak of the property boom.
However, this would only become an issue if a sale of the property were to take place in the current climate. Homeowners might be better served to stay in the property and ride out the storm rather than sell it for a price that would be much lower than expected.
A senior property analyst at ABSA, Jacques du Toit said that a homeowner who obtained a 100% bond early this year and now wanted to sell the property might well be unable to sell it for a price that covered the bond. Essentially, the more recently a bond has been taken out, the higher the likelihood of this happening.
Another important contributing factor is the size of the mortgage bond as compared to the cost of the property. “Those who have not put down a deposit and [have] taken out a 100 percent bond are more at risk,” said du Toit.
It is also possible that some homeowners have “dipped into their bonds” and taken out some of the equity to finance or pay off other debts, but it would be impossible to determine to what extent this has occurred. The problem is that those who have done so will have accumulated more debt as a result.
Eventually, these homeowners would no longer be able to afford the bond repayments and would not have equity left in their bonds. Nxedlana maintains that the short-term outlook for the residential property market remains bleak.
The information in this article is courtesy of Roy Cokayne (“Homeowners risk negative equity as house prices drop”, Business Report, 2 July 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.coastalrealestate.co.za or www.falsebayproperty.co.za.
Monday, June 30, 2008
Emerging Markets Fighting Inflation
Emerging Markets Take Positive Steps
An article published on the Sify website has highlighted increasing inflation in a number of emerging markets over the last year. While this problem is also being experienced in developed markets, rising inflation is especially acute in emerging markets because food tends to account for a much larger percentage of consumer price indexes.
To add insult to injury, many countries are working close to full capacity because investment has not kept up with economic growth, which consequently pushes up wage inflation. Official statistics may actually mask the true extent of inflationary pressures in some cases, but there is evidence that the skyrocketing food and energy prices are seeping through to core inflation (in other words, having an effect on other inflationary factors).
Concern has also been raised in terms of the effect of price increases and the various official responses to the situation. Vietnam reported a year-on-year inflation rate of 25% in May, which has seen a proliferation of labour strikes in reaction to this and growth forecasts have since been cut. China is also experiencing a core problem with rising food prices. Even Egypt has hiked public sector wages by 30% in a bid to prevent social unrest. Indonesia is said to be willing to spend a fifth of its annual budget to shield citizens from energy price increases.
Without a doubt, the inflation pressures being experienced by emerging markets seem much worse than in developed countries. Such a development is certainly worrying, as measures including subsidies, price controls and export bans can only provide short term relief at best, while probably just storing up long term problems for the future.
However, there has been a responsible approach taken by various authorities in many countries affected that is somewhat encouraging. For example, Egypt’s decision to pay for the state sector’s wage hikes by curtailing tax exemptions for firms operating outside of ‘free zones’, imposing taxes on interest earned from Treasury bills and cutting state fuel subsidies.
Indonesia announced recently that it would reduce fuel subsidies by 30%, while Taiwan has decided to abandon them entirely. Continuing the trend, Malaysia and India have also decided to reduce fuel subsidies. The current policies will go a long way towards stabilizing the finances of these countries and help direct necessary resources to other parts of their economies.
While moves by central banks in South Africa to raise interest rates in a bid to quell inflation are generally considered bad news for stocks, when it comes to the long term, it is encouraging to see the increasing credibility that these banks have acquired in battling rising prices. The same policies have been applied by banks in Korea and Chile, which ensures that the responsibility for dealing with inflation is taken out of the hands of politicians.
It is important to keep the threat of inflation in context, as policy makers in some emerging markets insist that the spike in inflation is due in part to a short term supply stock in food and energy that will soon ease as higher prices lead to increased supply. There is merit to such arguments and while recent developments are concerning, inflation should not yet be seen as a ‘crisis’ that poses a threat to the overall attraction of the world’s fastest growing economies.
Some countries have also pegged their currencies to the US dollar and successive cuts in interest rates in the US have made the inflationary problems in these countries worse, while already struggling with their economies in overdrive. How long this policy remains in place depends largely on the economy in question, as well as the priority each central bank puts on inflation control.
In general, local currency appreciation and higher interest rates should really help combat inflation. It is believed that the prospect of currency appreciation will not exacerbate the problems being experienced by emerging markets by pulling in more capital, simply because there a number of emerging market currencies are still relatively undervalued.
Equity investors are concerned about emerging markets partly because of the possible severity of measures implemented by governments in an effort to cool the economy and partly because of the cost pressure that local manufacturers might face as a result of price increases. Of course, another concern is the depreciation in value of future money. However, in places like Latin America and Russia, the recent spike in global inflation has been concentrated in commodities and this has actually helped stock indexes.
While the price of commodities may drop from their peaks, these prices are not foreseen to reach extremely low levels in the near future. This is due in part to the continued demand from emerging markets and the relatively inelastic supply. Thus commodity companies should remain in a profitable position and constitute an attractive investment opportunity.
The information in this article is courtesy of Mark Mobius (“Rising inflation in emerging markets”, Sify Finance, 29 June 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Friday, June 27, 2008
The Unsustainabilty of Western Economics
“THE UNSUSTAINABILITY OF
As the global economic meltdown worsens with each subsequent fuel hike, and new reports surface of another bank or country affected by exposure to the “sub prime “investment debacle.
Obviously oil was cheap and give or take a few political and military hiccups in the
Another term that Schumacher coined was “Appropriate Technology “meaning that the resources used to create the means should be justified by the end use. For example a bicycle once made was carbon neutral and in use thereafter provided cheap and efficient transport. Another example would be an aircraft that is rescuing people is appropriate technology, but not when used as a war machine.
It is a known fact that large concentrations of people have a huge environmental impact on their surroundings with the waste, sewage, traffic congestion and other resultant factors. The unreality of our monetary system is designed to enslave the population in a web of high interest debt and inflation that is built into the workings of the economy.
We are exchanging most of our working life in pursuit of food and shelter and accumulating more and more debt and taxes. In a rural small village environment we could build modest natural homes and grow our own organic food and get rid of all the middle men and packaging that inflates the prices. Surprisingly we might even find that we now have time for dreaming and family pursuits. The spiraling food costs are linked to the energy scarcity and other costs and these are not likely to ever go down again. The “ Bio Fuel “ idea is another example of symptomatic thinking like trying to rearrange the deck chairs on the Titanic and this idea poses huge risks to the future food supply of planet Earth. The problem is getting rapidly worse as the populous second and third world nations buy into the “ Big Stupid “ and are likely to follow the west into environmental and economic oblivion.
Our centralized Western arms based economies need to smell the coffee and reinvest all those billions of dollars into an economy and a world where people matter. More likely the individual will once more have to lead the way. Perhaps the sixties anthem is relevant once more? TURN ON, TUNE IN AND DROP OUT…..
Harold Kolnik. June 17, 2008
The present dead end economic stale mate prompted me to write this article. There has to be a better way to practice economics.
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Tuesday, June 24, 2008
False Bay Attractions
Youth Day Regatta in False Bay
Home to the False Bay Yacht Club, the month of June plays host to a youth day regatta where dinghy sailing takes place in the morning and there is keelboat racing in the afternoon. The primary goal of the event is to introduce junior sailors to keelboat sailing in the relatively safe waters off the False Bay Coast. Yacht clubs register to take part and sailors and sightseers come from all over the Cape to take part. This year the regatta was held on the 16th of June and proved to be a wonderful success, providing those who took part with the opportunity for some off-season sailing in the ideal waters of False Bay.
Whether you are interested in coastal property for the sun, sea and sand on offer, False Bay certainly provides residents and visitors with plenty of activity on and off the water. If you are interested in buying or selling property in False Bay, please don't hesitate to visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Home to the False Bay Yacht Club, the month of June plays host to a youth day regatta where dinghy sailing takes place in the morning and there is keelboat racing in the afternoon. The primary goal of the event is to introduce junior sailors to keelboat sailing in the relatively safe waters off the False Bay Coast. Yacht clubs register to take part and sailors and sightseers come from all over the Cape to take part. This year the regatta was held on the 16th of June and proved to be a wonderful success, providing those who took part with the opportunity for some off-season sailing in the ideal waters of False Bay.
Whether you are interested in coastal property for the sun, sea and sand on offer, False Bay certainly provides residents and visitors with plenty of activity on and off the water. If you are interested in buying or selling property in False Bay, please don't hesitate to visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Tuesday, June 17, 2008
Rate Hike Announcement "Good News"
Interest Rate Hike Less than Expected
The monetary policy committee's recent decision to hike interest rates by just 50 basis points, as opposed to the expected increase of 200 basis points, came as a relatively "ironic twist" and proved to be relatively "good news" for the residential property market in particular.
Homeowners are already under immense pressure with rising food and fuel prices and there were fears of at least a hike of 100 basis points after Reserve Bank governor Tito Mboweni hinted to the public. However, the residential market is still to experience the effects of the last increase in April.
Estate agents seem relieved, but are also aware that the market is still yet to experience the effects of the latest hike. The residential property market is bound to see a further slowdown in house prices and more "distressed" mortgage bond holders in the coming months. There is also the distinct possibility of more interest rate increases.
Whatever the case, it is clear that consumers will continue to feel the pinch of high interest rates and soaring food and fuel prices for some time to come. The market may be experiencing a slowdown, but there are many who believe that this is just part of a natural cycle sped up by a world economy in crisis. Experts have indicated that the situation is likely to continue for some time to come, but ultimately it will improve.
The information in this article is courtesy of Nick Wilson ("South Africa: Property Sector Relief at Rate Hike", Business Day, 13 June 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
The monetary policy committee's recent decision to hike interest rates by just 50 basis points, as opposed to the expected increase of 200 basis points, came as a relatively "ironic twist" and proved to be relatively "good news" for the residential property market in particular.
Homeowners are already under immense pressure with rising food and fuel prices and there were fears of at least a hike of 100 basis points after Reserve Bank governor Tito Mboweni hinted to the public. However, the residential market is still to experience the effects of the last increase in April.
Estate agents seem relieved, but are also aware that the market is still yet to experience the effects of the latest hike. The residential property market is bound to see a further slowdown in house prices and more "distressed" mortgage bond holders in the coming months. There is also the distinct possibility of more interest rate increases.
Whatever the case, it is clear that consumers will continue to feel the pinch of high interest rates and soaring food and fuel prices for some time to come. The market may be experiencing a slowdown, but there are many who believe that this is just part of a natural cycle sped up by a world economy in crisis. Experts have indicated that the situation is likely to continue for some time to come, but ultimately it will improve.
The information in this article is courtesy of Nick Wilson ("South Africa: Property Sector Relief at Rate Hike", Business Day, 13 June 2008).
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.falsebayproperty.co.za or www.coastalrealestate.co.za.
Monday, June 9, 2008
Good News for South African Property Market
Report reveals good news for South African property market
A recently released report reveals that the country's property market is in good shape and that, while the ‘boom' is tapering off in certain cities, it's only growth rates, not actual property prices that are dropping.
Leading marketing insights company, Knowledge Factory, has released a report on property price growth rates for South Africa's major cities. Entitled ‘Report on South African Metropolitan Areas: Property Price Growth', the report is based on data derived from the company's popular South African Property Transfer Guide (SAPTG). The report presents an overview of both historical trends and predicted property price growth rates for South Africa's major cities.
“This report might surprise some property professionals because it confirms that property prices have not dropped recently, but are just growing at slower rates in some areas than has been previously experienced,” observes Veronique Kotzé, Western Cape regional sales consultant for the SAPTG and the report's author. “It's really a ‘good news all round' report. Overall, the whole country is in good shape and has been experiencing strong growth everywhere.”
Deeds data reveals prices and predictions
Like all of the SAPTG information, the report's figures are based on the latest Deeds Office data, in conjunction with other proprietary datasets developed by Knowledge Factory. The following major cities are covered - Bloemfontein, Cape Town, Durban, East London, Johannesburg, Port Elizabeth and Pretoria - and all free standing and sectional title properties (larger than 40m2) were examined, excluding properties categorised as small holdings or farms.
“We also used median purchased prices, as opposed to averages, to make the data as accurate as possible,” explains Kotzé, “because we're obviously dealing with very large areas and extremely diverse property types.”
As well as highlighting median prices for 2006, 2007 and 2008, together with the year-on-year growth rate achieved, the report also predicts expected growth for 2009 and 2010. “Although it should be noted that these forecasts do not take economic factors, such as the impact of interest rates, into consideration,” notes Kotzé. “They are simply based on previously achieved growth and the patterns revealed by those property sales.”
Johannesburg's lead ‘no cause for alarm'
The report shows that Johannesburg enjoyed a price growth rate of 21 percent between 2006 and 2007, but that this tapered off dramatically between 2007 and 2008 to -17 percent. A drop that Kotzé believes is a normal indication of the end of the city's property boom and no cause for alarm.
“Johannesburg has, to a large extent, led the national property boom of recent years,” Kotzé maintains, “and so it is natural that it should also be the first city showing a slight downward trend because of demand dropping off. There has been a slight drop in prices, as the result of a combination of complex factors, but, generally, it still continues to grow, just not as rapidly. I'm also confident that if we were to extend the report on for a further five years, we would see it balance out.”
Pretoria and Cape Town also slowing down
Pretoria has been experiencing the same type of growth as Johannesburg, but not quite so acutely. The city enjoyed a 14 percent price growth rate between 2006 and 2007, which also dropped between 2007 and 2008, down to 4 percent.
“Pretoria has always fluctuated less and been more stable than Johannesburg,” observes Kotzé, “and perhaps the data gives us a clue as to why since it shows that the median price of property is higher than in Johannesburg. This suggests that the city doesn't have as much middle to low cost housing and, therefore, has older, more stable residential areas.”
Cape Town's property price growth rate is also slowing down and suggests that the property boom is tapering off there too. The 2006 to 2007 growth rate of 22 percent dropped to 6 percent between 2007 and 2008. Nonetheless, the city continues to offer the highest median values for property across the country.
Regional cities on the up
In contrast to the big three metropolitan areas, regional cities like Bloemfontein, East London and Port Elizabeth are in the midst of their property booms and currently enjoying healthy property price growth rates of 40, 30 and 14 percent, respectively. “This is great news and a reflection of both big economic injections, like the building of the 2010 stadiums, and strong property development,” Kotzé notes, “although, clearly, these growth rates are also expected to start to curb over the next few years.”
Kotzé is also quick to point out that the report suggests that Port Elizabeth is actually at a different stage in the growth cycle to Bloemfontein and East London. “In fairness to Port Elizabeth, while its property boom started after the big three, it is ahead of the other regional cities,” she observes. “A fact reflected in the 40 percent price growth rate it achieved between 2006 and 2007.”
Growth rate reflects stage in property cycle
While the report reveals that some metropolitan areas are enjoying significant growth and prices are dropping in others, Kotzé reiterates that this is really a reflection of where that particular city is in the property cycle and current levels of demand for property, rather than the actual value of the property within it.
“This report is only a very high-level snapshot of a complex set of underlying conditions,” she confirms, “but it still clearly shows that property prices have not dropped. They are just growing at a slower rate than they have in recent years. Some properties have indeed been sold "at a lower price", probably due to recent rate increases, but this is not a trend yet. Further hikes and other economic pressures may very well change that. It may well take longer to sell a property in the big three cities right now, particularly in relation to expectations that were set three or four years ago, but the value of that property is still growing.”
For further details about the SAPTG ‘Report on South African Metropolitan Areas: Property Price Growth' or to find out more about subscribing to SAPTG, the leading and most comprehensive web-based source of information relating to South African real estate, visit the SAPTG website at www.saptg.co.za or contact Knowledge Factory directly on (011) 445 8150.
If you would like to buy or sell property in Cape Town's False Bay area, please visit www.coastalrealestate.co.za or www.falsebayproperty.co.za.
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