South African Property News

12 Easy Ways to Advertise Your Property Website Offline

2010-01-20T03:40:00.000-08:00

The Internet has become a huge resource for selling property and continues to become more and more popular among house hunters. It is therefore an absolute necessity to make sure your property website enjoys good exposure on the net. While online advertising helps you to drive traffic to your site, offline advertising helps present your message and even reinforce it for those who have already spotted your online presence, plus you can target people who don’t have Internet access and email capabilities. Here are some quick and effective ways to ensure sufficient offline advertising for your property website:

1. Utilise For Sale/On Show Boards
All real estate agencies use real estate boards to indicate property for sale or show houses. Make sure that your web address is printed on these boards. This is an effective way of using space to market your website.

2. Mark Corporate Stationary
It is extremely important to use every opportunity you get to market your website. Always print you web address on all your corporate stationary. This includes letterheads, fax coversheets, envelopes, business cards, email signatures etc.

3. Let your Voice Message Speak for You
Leave your website address on you voice message and encourage callers to visit the site for information. It is really as easy as that.

4. Drive Advertising with Company Vehicles
Printing magnetic decals with your company logo and web address is a cheap and effective way to advertise your website. An even cheaper alternative is to stick a bumper sticker with your details on your car or company transport.

5. Spread Flyers
Distribute flyers with you website’s details on it wherever you go. Carry a role of tape and flyers with you and put it up when you see an opportunity. Ask friends and family to help you distribute flyers by displaying it at their place of work.

6. Wear Your Website
Buy t-shirts and print you web address on it. Ask your employees to wear these t-shirts to the gym or make Fridays your t-shirt day at work. This is a fun and inexpensive way to market your company’s website.

7. Give It Away
Promotional giveaways are a great way to market your website offline. Promotional gift can be anything from coffee mugs and pens to calendars and fridge magnets. These are things that people use everyday and provide you with a great opportunity to market your website.

8. Become a Sponsor
Sponsor the local school’s soccer jerseys and let them display you web address on the back of the jerseys or sponsor the prize for a competition. This will give you a chance to give your website more exposure.

9. Stamp Your Mail
Make sure your website address is display on all mail and packages. Design a stamp with your web address engraved in it. Use red ink to stamp your website’s address on the envelope or package to make it stand out.

10. Use Digital Billboards
High traffic areas usually have a digital billboard next to the road. This is a golden opportunity for a real estate agent to market his or her website.

11. Encourage Word of Mouth
Ask family, friends and employees to tell potential clients about your website and the services you render.

12. Network
Always carry your business card with your web address printed on it around with you. Attend networking events and hand out your business card to other business owners or contacts.

Many experts believe that you online presence begins offline and that the value of offline advertising is often overlooked. The right mix of online and offline advertising is bound to drive large amount of traffic to your property site, enhancing your chances to make a sale.

House Prices Rise Yet Again

2009-11-16T04:42:00.000-08:00

The information in this article is courtesy of Realestateweb (House prices surge for fifth consecutive month - 13 November 2009)

The oobarometer has shown a rise in house prices for the fifth consecutive month. It is also the biggest monthly increase we have seen since houses prices started rising.

The oobameter findings include:

House Price Deflation Continues to Slow Down

2009-10-07T01:43:00.000-07:00

The information in this article is courtesy of Business Report (Absa: House prices set to rise again – 7 October 2009)

The latest Absa house price index showed that nominal year-on-year price deflation in the housing market has slowed down even further in September 2009.

Jacques du Toit, Absa’s senior property analyst, believes that if these trends continue, South Africa might see house prices rising in the near future.

On a month-on-month basis, prices continued to rise in September after reaching a lower turning point in April this year.

Absa said that middle-segment house prices were down by a nominal 0.3 percent year-on-year to R966,300 in September 2009, from a revised -1.1 percent year-on-year in August.

On a monthly basis, house prices increased by a nominal 0.8 percent in September, from a revised increase of 0.9 percent in August.

Absa said that by September, the average house price was 3.4 percent up on the low reached in April 2009.

In real terms, house prices in the middle segment were down by 7.1 percent year-on-year in August (versus -8.2 percent year-on-year in July).

Prices of small houses (80m-140m) were a nominal 4.2 percent year-on-year lower in September (versus -4.4 year-on-year in August after revision).

"This brought the average nominal price of houses in this segment to about R651,400 in September," Du Toit said.

With regard to medium-sized houses (141m-220m), the average nominal price declined by 5.2 percent year-on-year in September (versus -4.7 percent year-on-year in August after revision), which brought prices in this category of housing to an average of R901,700.

According to Absa, this translated into a real price decline of 10.4 percent year-on-year in August (versus -10.2 percent year-on-year in July).

Property Market Shows Signs of Recovery

2009-09-21T01:36:00.000-07:00

The information in this article is courtesy of iAfrica (Property slump is over! – 21 September 2009).

The latest OOBArometer price index is showing some signs of recovery after it recorded a 6.9% increase in year-on-year house prices. This is the third month in a row that the index showed an improvement.

According to chief executive of OOBA, Rhys Dryer, the biggest drivers of a market recovery is bank lending. There has also been an improvement in competitiveness between banks and an increase in approval rates.

The price of an average house now stands at R795 241. Last August this price was R743 403.

The month-on-month average purchase price has also increased by 2.5 percent from R775 172 in July of this year.

The year-on-year average bond size is still down by 5.4% although the month-on-month average approved bond size has shown a 4% improvement.

At the moment buyers are paying an average of 23.1% deposit on the purchase price compared to the 13% paid last year August. This figures shows an improvement on the average deposit required from 24.2% in July 2009.

Banks willingness to lend is also being witnessed as the month-on-month average bank decline ratio shows an improvement for the fourth consecutive month. The index also recorded that 19.2% of applications declined by a lender is accepted by another bank.

According to Dyer there are now mounting evidence that the property market is heading towards recovery, which can be seen in increased applications and increased approvals, all driven by improved affordability, relaxation in the bank lending criteria, increased bank competitiveness and increased demand.

Mboweni Announces Surprise Rate Cut

2009-08-14T02:55:00.000-07:00

The information in this article is courtesy of Fin24 (Rate Cut Surprise – 13 August 2009)

South African Reserve Bank Governor, Tito Mboweni surprised the nation yesterday by announcing a 50 basis point rate cut. This brings the interest rate down to 7.0%.

According to Mboweni the monetary committee had quite a long debate about the issue and in the end the cut was agreed on.

He said that the international economy seems to have improved although he warned that recovery would not be uniform across all regions and countries.

He also added that it is clear that the exchange rate has been of some assistance in the job of lower the country’s inflation.

Consumer Price Inflation (CPI) are forecast to stay more or less unchanged with CPI inflation predicted to continue a moderate downward trend and enter the target band around the second quarter of 2010 and remain there until the end of 2011.

Have We Reached the Bottom?

2009-08-07T00:21:00.000-07:00

The information in this article is courtesy of iAfrica (Almost, but not quite – 6 August 2009)

According to Absa’s House Price Index for July, the houses price deflation may be bottoming out.

According to Absa analyst, Jacques du Toit, South African house prices have been deflating since late 2008. However the trend seems to be near the turning point on a year-on-year basis, while month-on-month deflation has also slowed down further in July after bottoming out in March this year.

House prices in the middle segment of the market were down by 4.2% year-on-year to R925 100 in July, following a decline of 4.1% year-on-year in June.

Houses prices were 0.2% lower in July on a month-on-month basis, compared to a decline of 0.4% recorded in June.

According to du Toit, this means that the average nominal price for middle segment houses were at their lowest level in July since the second quarter of 2007.

He added that although the South African economy is currently in recession, we could expect the bottom of the cycle and gradual recovery toward the second half of the year. Du Toit also predicts that house price will continue to decline, but the pace of the decline was also suspected to slow down during the second half of this year.

The projected price decline for this year stands at between 3 and 3.5% after last year’s 3.7% price increase.

The End of the Line for Rate Cuts

2009-07-31T00:47:00.000-07:00

The information in this article is courtesy of iAfrica (The party’s over – 28 July 2009)

The Bureau for Economic Research (BER) announced this week that consumers should not expect any interest rate reductions in the foreseeable future.

The bureau's economist Hugo Pienaar said in a statement on economic prospects for the third quarter of 2009, that this was in light of recent double-digit wage settlements in a number of sectors and indications that the worst of the domestic recession might have passed.

Last month South Africa saw Reserve Bank's monetary policy committee deciding to keep the interest rate unchanged at 7,5% after reducing the repo rate by a cumulative 450-basis-points between December 2008 and May 2009.

According to Pienaar the June rate decision can be interpreted as a pause in the rate cycle in order to give the MPC an opportunity to gauge the impact of the rate, which generally takes a while to take effect.

He added that the decision also indicates that we have reached the end of the monetary easing cycle, meaning no further rate cuts should be expected.

Prospect for consumer spending remains a concern mainly due to the potential for further sharp job losses. This means that the Reserve Bank could cut the repo rate further later in 2009 should household outlays continue to deteriorate and inflation slows faster than expected.

“In line with the South African Reserve Bank's latest inflation projection, the bureau's forecast suggested CPI would remain above six percent through February 2010, with a sustained fall below six percent only forecast from the second quarter of 2010,” said Pienaar

He added that petrol prices could decline by more that 20c per litre in the beginning of August due to the strength of the rand exchange rate and a recent drop in the oil price.

All and all South Africans can expect a positive gross domestic product growth from the third quarter, but the economy was forecast to contract by 2% during 2009 bringing the projected growth for 2010 to about 2,7%.

Mboweni’s Successor Announced

2009-07-20T01:34:00.001-07:00

The information in this article is courtesy of iAfrica ( Mboweni steps down - 20 July 2009)

The current Chair of Absa Bank, Gill Marcus will be Reserve Bank Governor Tito Mboweni’s successor. This was announced by president Jacob Zuma at the Union Buildings on Sunday, 19 July 2009 after Mboweni indicated that he wanted to step down to pursue his own personal interests.

After being introduced to the media, Marcus refused to be bated on her views about the bank’s current inflation targeting policies, saying that it is far to early to comment.

Marcus has been seen as someone with good economic experience from both private and public sectors. This indicates that the market will likely welcome her appointment.

Mboweni said in his speech that he enjoyed an excellent working relationship with the presidency, the national treasurer and the minister of finance during his time as governor. He also congratulated Marcus on her appointment.

The SA Communist Party also congratulated Gill saying that her appointment is a “breath of fresh air”.

Economist Mike Schussler said that Marcus is a person with sound judgment, adding that her knowledge of the institution would ensure continuity. According to him there should be change in policy from her.

Demand Still a Problem – FNB Barometer

2009-07-16T00:27:00.000-07:00

The information in this article is courtesy of Realestateweb (Property market sentiment worsens – 15 July 2009)

The latest FNB Residential Property Barometer shows that demand for residential property is still very low causing an oversupply of stock on the market. Estate Agents who took part in the survey believe that the banks’ strict lending criteria and high deposits on home loans are to be blame for the low levels of demand.

Other finding by the survey include that more than 30% of seller would like to offload properties in order to downgrade because of financial pressure. Also, low-income earners are apparently struggling the most, with more that 41% of seller indicating to agents that financial woes are their reason for selling.

Estate agents canvassed in the survey also suggested that about a third of investment properties returned to the market have been sold for less that the previous purchase price. The average time a property spends on the market prior to the sale increased to 21 weeks and one day, according to the survey.

With 86% of sellers required to drop their asking prices in order to make sale, estate agents still feel that seller are being unrealistic about their property values.

A more positive finding of the survey is that only 8% of sellers are mentioning emigration as a reason for selling. This is significantly down from 20% in the 3rd quarter of 2008.

Another finding is that fewer foreigners are buying property in South Africa although FNB reported to see a slight hint in the figures that expat buying has risen.

Although FNB said that they are starting to experience improvement in arrears situation, there is only a mild improvement in the demand situation, with the supply figures reflecting widespread financial pressure.

Bond Choice: Go Out and Buy

2009-07-10T01:22:00.000-07:00

The information in this article is courtesy of BusinessReport (Bond Choice urges consumers to go out and buy – 10 July 2009)

Although South Africa has not been affected as badly as Europe and the USA, it has led to a significant lowering in house price. According to Bond Choice, a mortgage origination company, this has bought new home ownership within reach of a new band of potential first time investors.

Managing Director, Kevin Mountjoy, explained that average home loans application has dropped between R550 000 and R600 000 with the top-end of the segment the most affected in terms of volumes,

He added that the current market made it possible for buyers to secure homes with the price they wish to - also known as the emotional price - due to the fact that the market is falling to levels last experienced in 1996, at rates not experienced since the 1980’s.

"Consequently, for genuine home owner seekers i.e. those who have secured professional advice on affordability and procured their 20 percent deposit plus the capital required for administration, the time for purchasing property has never been more advantageous," he said.

Mountjoy expressed that although South Africa had seen house prices drop with 20% to 25%, it is still not as bad as other parts of the world where price dropped with 50%. He added that South Africa had come of the longest sustained growth period in the last 35 years and he believes the industry should both acknowledge and rejoice the fact.

He predicts a recovery among middle-income housing, as buyers are showing some confidence in the market and seller are accepting the reality of a decline in prices.

June House Price Index - Slide Continues

2009-07-06T00:58:00.000-07:00

The information in this article is courtesy of iAfrica (Property slide speeds up – 6 July 2009)

John Loos, FNB’s property strategist said that the June house prices index show no sign of improvement and the 450 basis point shaved off the interest rate has had a marginal impact on property demand to date.

The rate of deflation for June came in at -10.2 percent year-on-year, compared with a revised -8.5 percent rate for May. On a month-on-month basis, the rate of deflation was -2.2 percent for June.

Although FNB has announced a mild relaxation on their credit policy is seems like banks have remained cautious. The debt-to-disposable income ratio also remained high and can probably be attributed to disposable income being under severe pressure due to the recession.

The pressured household sector was unable to respond nearly as aggressively to rate cuts today as it did in 1999 and 2003, as the high debt ratio is sustained by disposable income growth falling at a faster rate than households credit growth in recent quarters, said Loos.

He added that the affordable segment of the market has been the most recent casualty and can be seen as the segment where severe financial strain had been building up over the years.

Survey respondents from low-income areas reported a greater percentage of sellers selling in order to downscale as compared to higher income areas. Although it seems that times of financial stress will force buyers into entering the affordable segment, it seems like first-time buyers and those forced to downscale have rather opted to rent.

Loos added that former black township property behaviour displayed a similar weakening trend to the overall affordable segment. This causes great concern as the industries hit the hardest by the recession seems to employ those occupying the affordable segment.

Buyers Struggling To Secure Home Loans

2009-07-01T01:19:00.000-07:00

This article is courtesy of Realestateweb (Home Loans: Banks stingier than ever – 30 June 2009)

The recent statistics release by the South African Reserve Bank confirms that buyers are struggling to secure mortgage finance. This resulted in mortgages advances reaching the lowest level of growth in 9 years.

According to Jacques du Toit, senior property analyst at Absa Home Loans, the data released showed that the year-on-year growth in mortgage advances slowed down to 9,4% in May this year. Also, on a month-on-month basis the outstanding balance on mortgage loans was marginally higher in May, after growth of 0,1% was recorded in April compared to March.

Du Toit added that the amount of outstanding mortgage balances in the household sector was slightly down to R708,3bn in May, from R708,4bn in April.

This shows that the recession is taking its toll on not only households but also mortgage originators relying on home loan commissions and estate agents who need to close property deals.
"Despite interest rates having been cut by a total of 450 basis points since December last year, mortgage advances growth is expected to slow down further in the near term on the back of prevailing economic conditions, which are a contributing factor in the relatively low demand for housing and mortgage finance," said du Toit.

Agents Turn To Auctions

2009-06-22T02:45:00.000-07:00

The information in this article is courtesy of Fin24 (Agents to Auction Off Houses – 22 June 2009)

The slow property market has urged South African estate agents to turn to auctions as a means of selling property. The popularity of auctions has increased over the past year, mainly due to the fact that it provides a quick and efficient way to get rid of property.

Experts are now implying that the combination of estate agents’ skills and the conventional success of auctions could deliver satisfying results. Re/Max Southern Africa and Yellow Hammer has already announced a strategic partnership to supply auctioneering services to the property market.

Lew Greffen Sotherby’s International Realty has also taken initiative by launching its own venture – Saville Row Auctions. This company will focus mainly on industrial and commercial property, with some residential and recreational property also going under the hammer.

Andrew Smith, director of Yellow Hammer, thinks that all agents will turn to auctions at some point. He added that concept differs from traditional methods of auctioning in that it combines estate agents' out-of-hand methods of selling with auctioning. This way estate agents can use their expertise, skills and contacts to increase the exposure of a property while the auction is used to efficiently concluded the transaction.

Smith added that auctions is both beneficial for the seller and the agents as it is the most active market and estate agents can earn an income in less time and from a broader spectrum.

According to Smith there is no competition between the estate agents and Yellow Hammer as they work independently from the agents.

Price Decline Makes Property Affordable

2009-06-15T03:28:00.001-07:00

The information in this article is courtesy of Business Day (Real Price Decline Makes Property Buying more Affordable - 15 June 2009)

Mike Bester, Realty 1 International Property Group CEO, said in an article on the Business Day website that South Africans can realistically hope that the worst of the recession will be behind us by the end of 2009. This comes after consumer confidence in the US improved measurably in the past weeks.

He explained that expectations are growing that the US will reach the end of its depression in the third quarter of 2009. Reports by Absa showed that this country had experience its biggest monthly gain in its expectations index since April 2003.

Back in South Africa however, locals can scoop up some serious bargain, according to Bester. This after house prices showed a first quarter, year-on-year decline for the first time since late 1986.

With the market set to get worse before it get better, it seems that now is the best time to buy. However, Bester warned prospective buyers should be sure what they can afford in terms of monthly repayments, and should not bargain on the interest rate dropping any further.

Bester believes that our nation has lost the discipline of saving, which is a real problem since banks are reluctant to grant loans without a significant deposit. He went on to explain that those currently in the market will make their profits out of buying not selling. This means that buyers should spend a bit more time upfront on getting to know the market and what is for sale in the area in which they want to buy. He especially called on potential buyers to pay careful attention to the properties that have spent a long time on the market because the longer a home has been on the market, the more likely you are to get it for a fair, if not bargain, price.

He also advised buyers to learn the difference between cheap and good value. This means that if you can’t find a bargain, you should be happy with a fair price knowing that you can achieve good capital growth in the long-term.

Another tip from Bester is to act quickly when you found the right property. This means being pre-qualified, flexible and ready to move when you signed the deal – all things that can serve as motivation for a better deal.

100% Home Loans Are Back

2009-06-12T00:16:00.000-07:00

The information in this article is courtesy of Fin24 (100% home loans on offer again – 11 June 2009)

The launch of Shaft Citi – a new development for affordable housing in Germiston on the East Rand – showed that banks have quietly adjusted their approaches to risk with some of them granting 100% home loans for the more affordable side of the house market.

The surprising twist came when 26 out of the 67 sectional title units sold, were taken up with 100% bonds.

Ben van Niekerk, director of Nu Citi Developments, explained that they negotiated with four major banks and Absa and Nedbank indicated that they would approve 100% loans for the development. FNB still has to make a final decision and Standard Bank is considering only their own clients for 100% bonds. Nedbank, however will only approve 100% bonds for properties up to R250 000 with buyers being assisted through the entire purchasing process by a mentor.

According to Andre Dippenaar, who is marketing the development for Pam Golding Estates, banks are slowly but surely relaxing their strict lending criteria.

The development is aimed at households earning R7500 to R25 000 a month.

A 100% bond of R150 000 over 20 years will result in a monthly payment of R1548 at current prime rate of 11%.

Pressure on House Prices to Continue

2009-06-09T01:39:00.000-07:00

The information in this article is courtesy of The Times (Absa mid house prices slide 3.6% y/y – 8 June 2009)

Absa announced yesterday that the average nominal price of middle-segment housing was down by 3.6% year-on-year to R932,000 in May 2009. April 2009 showed a decline of a revised 3.2% y/y.

This is the biggest decline since September 1986 when it was also –3.6% y/y.

Compared to April, nominal houses prices were 0.5% lower in May on a month-to-month basis. This contributed to nominal houses prices in the middle-segment being R35,300 lower in May 2009, after peaking at R967,300 in May last year.

Middle-segment house prices were down by a real 10.7% y/y in April, after declining by a revised 10.2% y/y in March. This was the biggest real year-on-year decline since September 1992.

These calculations are based on the consumer price index (CPI) for all urban areas, available from January 2008 as published by Statistics South Africa. These figures are also used by the monetary committee for policy purposes.

Absa also announced that small house prices dropped by 4.0% y/y in May, after 3.2% y/y was recorded in April of this year. This brings the average price for small houses to R658,200.

The average nominal price of large houses declined by 3.5% y/y to around R1,344 million in May this year, after declining by a revised 3.6% y/y in April. This means that the average price of a large houses now stands at R53, 200 below the peak of R1,398 million reached in May last year.

Other sectors like the construction sector are performing relatively well however developments are believed to record negative real growth for the full year.

According to Absa the residential property market is expected to remain under pressure until late 2009.

Large Cut in Agent Numbers

2009-06-08T02:05:00.000-07:00

The information in this article is courtesy of Business Report (Slump in property market cuts estate agent numbers – 8 June 2009)

The slow property market and low sales levels have resulted in the number of registered real estate agents in South Africa to drop with more than 50% - from 84 000 agents in 2007 to 38 000 this year.

Willie Marais, the national president of the Institute of Estate Agents of South Africa, explained that this was the number according to the Estate Agency Affairs Board computer, suggesting that the number of active agents is far less.

Marais added that the number of agents is not likely to increase even if the economy shows some improvement. This is mainly due to the fact that credit extensions legislation would limit the number of property transactions and the profitability of agencies. Also, new legislation governing the training and qualifications of estate agents is likely to convince older agents to retire. This will also reduce the number of new entrants to the industry. Marais also believes that the cost of registration might increase because of the reduction in the number of registered agents.

According to Marais, IEASA has not kept record of the number of liquidations since the property slump, however he thinks that the number of agencies closing down is bigger than we think.

Recession Hampers Result of Rate Cuts

2009-06-02T02:13:00.000-07:00

The information in this article is courtesy of Business Day (Recession negates effect of rate cuts on home property market – 2 June 2009)

According to John Loos, FNB property strategist, selling due to financial pressure was a key driver of supply.

Loos said that despite interest rate cuts, the economy are still hampering the pace of residential demand, helped on by the announcement that South Africa has slipped into an official recession.

Last week’s decision to cut the interest rate by another percentage point, bought the interest rate reduction since December to 4,5 percentage points. Loos recons that this can only bring some relief to a credit-sensitive market as the residential property market.

Loos warned that consumers could only expect a mild improvement in residential demand in 2009 and that house prices are set to decline till the end of the year. However, this price deflation will peak around mid-year and consumers can expect the rate cuts to start taking effect during the second half of the 2009.

The good news, according to Loos, is that debt repayments are declining – taking the pressure of cash-strapped consumers.

Commercial banks have also reduced their lending rates to the public to 11%.

Was This the Final Rate Cut?

2009-05-29T01:52:00.000-07:00

The information in this article is courtesy of Business Report (Mboweni signals the last rate cut – 28 May 2009)

The South African Reserve Bank’s monetary committee again gave consumer reason to smile when they cut the repo rate by another 100 basis point, leaving the interest rate at 7.5%. This is on top of the 4.5% that was shaved of the interest rate over the past four months.

Reserve Bank Governor, Tito Mboweni, announced the cut yesterday and added that the monetary policy committee would not consider any further significant rate cuts. He also warned that the MPC has done as much as it can.

Mboweni feels that cartel and monopoly pricing practices in the food and steel industries, and Eskom's controversial request for a 34 percent interim increase in electricity tariffs are not helping their efforts to bring down inflation that recorded 8,4% last months.

Mboweni responded to a question by saying that the fact that the real repo rate was negative was one factor in this decision and the other was that the effect of the previous rate cut was yet to be seen. According to Mboweni, the challenge was to balance concerns about consumer inflation against fears about the depth of the recession.

The deciding factor, however, was concerns over the 208 000 job losses in the first quarter and a sharp contraction in gross domestic product (GDP).

Mboweni was initially reluctant to start the rate cut cycle mainly due to the fact that rate cuts weaken a currency. Fortunately the Rand has been stable, even strengthening against major currencies at times.

SA Officially in Recession

2009-05-27T04:49:00.001-07:00

The information in this article is courtesy of The Times (SA hits first recession in 17 years – 27 May 2009).

South Africa has entered its first recession in 17 years. This comes after the economy decline by an annualised 6,4% in the first 3 months of 2009 – a result that was much worse than expected.

This announcement will back the case for another 100 basis point rate cut when the Monetary Committee meets on Thursday, 28 May.

It is expected that the economy is going to continue its downward spiral but not by much.

According to Joe de Beer, executive manager for national accounts at Statistics South Africa, the decline in economic activity is widespread across the economy with both the mining and manufacturing sectors posting the lowest quarter growth rates on record.

All signs point to a bigger rate cut with Jeff Gable, head of research at ABSA Capital and other analyst agreeing that the GDP data would likely tip the scale in favour of a full percentage point cut.

Central bank Governor Tito Mboweni is due to announce the rates decision from 13:00 on Thursday, when the monetary policy committee concludes a 2-day meeting.

Call For 150 Basis Point Cut

2009-05-26T00:26:00.000-07:00

The information in this article is courtesy of Fin24 (4200 SA firms to shut in ’09 – 25 May 2009).

According to Statistics South Africa, a total of 349 liquidations were recorded for April 2009 – an increase of 41,3% year-on-year. These liquidations mostly occurred in the financing, insurance, real estate and business services. Fin24 reported that 308 of these liquidations were voluntary, while 41 were compulsory.

Meanwhile a leading economist suggested that a cut of 150 basis points in the repo rate is needed to halt the slide in the real economy, as around 4200 corporate closures could be seen this year.

According to Luke Doig, senior economist at Credit Guarantee Insurance Corporation, the local real economy has been hit hard by a decrease in demand and the effect of lower interest rates are yet to kick in.

Doig recons a 150 basis point cut by the Monetary Policy Committee later in the week could be the answer that they have been looking for to halt the slide. He added that they have seen some positive signs of a let-up in the severity and occurrence of potential payment default, which might indicate that the bottom has been reached.

South Africans can expect the rate cut announcement by the Monetary Policy Committee shortly after 3pm on Thursday, 28 May 2009.

13 Easy Ways to Market Your Property Website Offline

2009-05-25T02:38:00.000-07:00

Marketing your website is as important as having one. That’s why many real estate agencies spend a large amount of time and money on online marketing strategies, including search engines optimisation, email marketing, and pay-per-click campaigns. These all-important methods are great ways to direct traffic to your site, but the marketing of your website will be incomplete without offline advertising. The good news is that there are easy, inexpensive ways to effectively market your website offline. Here are some ideas:

1. Use Corporate Stationary
It is extremely important to use every opportunity you get to market your website. Always print you web address on all your corporate stationary. This includes letterheads, fax coversheets, envelopes, business cards, email signatures etc.

2. Drive Advertising with Company Vehicles
Printing magnetic decals with your company logo and web address is a cheap and effective way to advertise your website. An even cheaper alternative is to stick a bumper sticker with your details on your car or company transport.

3. Wear Your Website
Buy t-shirts and print you web address on it. Ask your employees to wear these t-shirts to the gym or make Fridays your t-shirt day at work. This is a fun and inexpensive way to market your company’s website.

4. Spread Flyers
Distribute flyers with you website’s details on it wherever you go. Carry a role of tape and flyers with you and put it up when you see an opportunity. Ask friends and family to help you distribute flyers by displaying it at their place of work.

5. Let your Voice Message Speak for You
Leave your website address on you voice message and encourage callers to visit the site for information. It is really as easy as that.

6. Utilise For Sale/On Show Boards
All real estate agencies use boards to indicate property for sale or show houses. Make sure that your web address is printed on these boards. By using a small space you can market your property listings effectively.

7. Mark Marketing Materials
Brochures, flyers and ads in the newspaper can be use to advertise you website. These marketing materials reach a large audience and can be very effective to drive traffic to you site.

8. Give It Away
Promotional giveaways are a great way to market your website offline. Freebies can be anything from mugs and pens to calendars and fridge magnets. These are things that people use everyday and provide you with a great opportunity to market your website.

9. Become a Sponsor
Sponsor the local soccer team's jerseys and let them display you web address on the back of the jerseys or sponsor the prize for a competition. This will give you a chance to give your website more exposure.

10. Use Digital Billboards
High traffic areas usually have a digital billboard next to the road. This is a golden opportunity for a real estate agent to market his or her website.

11. Stamp Your Mail
Make sure your website address is display on all mail and packages. Design a stamp with your URL engraved in it. Use red ink to stamp your website’s address on the envelope or package to make it stand out.

12. Network
Always carry your business card (with your web address printed on it) around with you. Attend networking events and hand out your business card to other business owners or contacts.

13. Word of Mouth
Ask family, friends and employees to tell potential clients about your website and the services you render.

Mortgage Stress On The Rise

2009-05-20T02:24:00.000-07:00

The information in this article is courtesy of Business Report (Mortgage stress set to increase – 20 May 2009)

Alliance Group Auctioneers believes that properties that are two months behind with their payments is set to increase in the second quarter of the year.

The Distressed Asset Index, which is due to be released by Alliance Group at the end of June, indicates that mortgage stress (2 months behind on mortgage payments) will increase from 125 000 home owners to 200 000 home owners in the second quarter. The index also shows that severe mortgage stress (4 months behind on payments) will shoot up from 55 000 to 85 000.

According to Rael Levitt, CEO of Alliance Group, the market is expecting “jumbo mortgage distress” in luxury as well as developments and golf estates. He added that there is also some distress in the commercial property market.

Another shocking find by the Distressed Asset Index is that 80% of bondholders who were in severe distress would in all likelihood have to sell their homes. This led to a new programme by Alliance Group where real estate agents could earn commission by bringing buyers to auctions.

Levitt said: “Real estate agents and auctioneers will combine forces to assist struggling home owners to sell their properties successfully.”

Adding to this, Levitt said that the Broker Participation Programme would allow all brokers and estate agents to introduce buyers to properties that were being bought to the auction floor through various residential property recovery programmes.

Banks Constraining Economy

2009-05-19T05:50:00.000-07:00

(The information in this article is courtesy of Fin24 - Banks "Throttling the Economy" - 19 May 2009)

Large commercial banks are constraining the economy while the housing market threatens to collapse and millions of consumers are in debt. Among those agreeing with this statement is Reserve Bank Governor, Tito Mboweni, who is also accusing the banks of holding on to credit and aggressively pursuing the indebted.

The debt counsellors Consumer Assist said that property sales are down by 30%, mainly due to the banks not issuing loans.

According to debt counsellors, creditors were going after lenders aggressively, especially where vehicles and mortgages were involved.

New statistics also showed that 46% of tenants couldn’t pay their full rental each month, according to Consumer Assist.

CEO of Consumer Assist, Andre Snyman, said that many indebted consumers don’t realise that by selling their houses and cars don’t let them off the hook. He advised that such individuals should immediately go under debt counselling so the terms of the loan can be structured and they don’t have to lose the car or the house.

He stressed that it is critical for heavily indebted consumers to get help before legal actions is taken against them, as they are constrained in how much they can assist once legal action has begun.

Snyman stated that they are currently helping 66 759 people and the figure was growing by 7000 per month. They expect the number of people receiving debt counselling will grow by 300% this year.

Snyman is convinced that debt counselling is making a difference even though banks and creditors are trying to resist it.

"Once an individual is under debt counselling, no one can touch his or her assets for the first 60 days while the debts are being renegotiated," Snyman explained.

After that, Snyman explained, creditors cannot remove assets as long as the person keeps paying back, according to the restructured loan or credit agreement.

Snyman would like to see government and businesses developing systems to better help those trying to get out of debt, as consumers are still confused as about how to use debt counselling.

2,5% Growth Expected for SA in 2010

2009-05-15T00:52:00.000-07:00

The information in this article is courtesy of Mail & Guardian Online (Economy to see 2,5% growth in 2010 – 14 May 2009)

Ettienne Le Roux, senior economist at Rand Merchant Bank recons that South Africa’s economy might see up to 2,5% growth in 2010.

Le Roux announced this prediction while he was addressing the Steel and Engineering Industries Federation of South Africa’s annual conference in Johannesburg where he added that this figure should not be considered a bad performance.

Le Roux explained that the many “shock absorbers” that the country has in place won’t prevent a recession. These shock absorbers included a flexible rand exchange rate, counter cyclical policies, lower inflation, a social safety net, falling interest rates and infrastructure spend – all things that will allow South Africa to recover around the end of 2009 into 2010.

Le Roux said that leading up to the global financial crisis, the world had been in a bizarre state of stable disequilibrium and the surplus countries had allowed funds to flow into the deficit countries. Also, inflation was low and policy makers were complacent and there was a reduction in risk aversion. All of this, according to Le Roux was a breeding ground for problems.

"Interest rates had to go up and the rest is history," he said. He added that South Africa had enjoyed a boom period in 2003 where it imported more than it exported, resulting in a huge current account deficit.

He noted that both inflation and rates were low resulting in unsustainable spending, a rise in inflation and the monetary policy tightened.

This also led to the property bubble bursting and assets on balance sheets devaluated. Because the banks had problems they didn’t lend – a scenario where the economy can’t grow. Stimulus packages by governments, however, prevented a great depression. Le Roux explained that instead we have a recession in 2009.

"When there is a global upswing, South Africa tends to outperform global growth, but when there is a global downturn, we tend to under perform global growth."

He added that being a deficit country, meant that we suddenly no longer look attractive. Mining and manufacturing has been severely hit and because the consumer matters when it comes to our country’s economy, South Africa is now also suffering from a slow demand.

According to Le Roux this means that we need to get the consumers going if we want to restart the economy. He added that banks are not lending easily at the moment but once the economy stabilized we can expect banks to ease lending criteria.

Innovative Move Aims To Help Market

2009-05-08T01:06:00.000-07:00

The information in this article is courtesy of The Times (Real estate deal of the Century – 7 May 2009)

The ailing property market has taken its toll with only 35 000 agents remaining out of the 90 000 registered in the boom times.

In an effort to boost the struggling market, Century 21 - one of the world’s largest property groups - is offering 3 franchises worth R200 000 up for grabs.

Colleen Gray, managing director of Century 21 says that difficult times call for innovative solutions and they aim to make a difference with this initiative.

Century 21 has more than 8500 offices and 150 000 agents in around 67 countries around the world.

To enter the competition, you have to be older than 21 and registered with the Estate Agents Affairs Board. Those interested can visit www.century21.co.za for more information. The deadline for this golden opportunity is 31 May 2009.

House Prices Keep Falling

2009-05-06T00:44:00.000-07:00

The information in this article is courtesy of Mail&Guardian (House prices continue to deteriorate – 4 May 2009).

House prices continued to fall during April. This finding by the FNB House Price Index is mainly due to a sizeable oversupply that had built-up in the residential market.

John Loos, property economist at FNB said that the index had reached double-digit year-on-year average house price deflation for the first time reaching -10,2%. This was last seen at the end of 2006.

The recent interest rate cuts, according to Loos, might not be enough to break the downward cycle, as the significant oversupply of property on the market will take some time to be mopped up.

The troubled global economy and its impact on South Africa’s economy is the key threat to the housing market according to Loos. He added that May is an important month for the local economy with some key political matters to be settled.

Loos concluded by saying that it is crucial for the new political leaders to send out the right signals as political matter plays a huge role in a thin residential market.

Rate Cut: How Much Are You Saving?

2009-05-04T01:08:00.000-07:00

Tito Mboweni announced another 100-basis point rate cut on Thursday, bring it down to 8,5%. This means bondholders who have a Prime related mortgage can expect to have some more cash left in their wallets from next month. Here is a break down of what you can expect if you are paying your mortgage over 20 years.

R750 000 bond = R528.67 savings per month
R1 000 000 bond = R704.90 in savings per month
R1 500 000 bond = R1057.34 in savings per month

Cut Positive But Not Enough

2009-05-04T00:47:00.000-07:00

The information in this article is courtesy of iAfrica (Property hails rate cut – 30 April 2009).

A step in the right direction. This is how chief executive of Pam Golding Property, Andrew Golding describes the recent 100-basis point rate cut. He added that there are signs that a positive turn in the market is nearer rather than further.

Golding recons that under normal circumstances the 3,5% rate cut seen over the coarse of this year would have positively impacted property sales but due to the extra ordinary times we are currently experiencing, the interest rate reductions has had little impact on house sales.

He added that the rate cut has to some degree eased the burden on consumers but that the liquidity crunch that banks are experiencing should be eased to make a real difference in the property market. Golding does not see this happening in the near future.

Golding also believes that the stabilisation of sales volumes and further rate cuts would enable consumers to meet the banks’ strict lending criteria and improve affordability. He added that they should anticipate a wait-and-see attitude as the country has just elected a new president – and with any change there is a sense of hope.

Buy Cape Town property

South Africa’s Official Election Results

2009-04-28T01:04:00.001-07:00

The official result of South Africa’s fourth democratic election was announced on Saturday - 4 days after just more than 17 and a half million voters went to the polls.

According to the official results, the ANC won 65.9% of the votes, failing to secure a two-third majority. The Democratic Alliance remained the official opposition by taking 16.66% of the votes with new party COPE in third place with 7.24% of the total votes.

Brigalia Bam, chairman of the Independent Electoral Commission said that she has no doubt that the basic features of our democracy are great and also commended all parties and candidates for the peaceful manner in which they campaigned.

The results also showed that the ANC will have 264 seats in the national assembly, with the DA 67 seats and COPE 30 seats.

Provincially the ANC dominated 8 of the 9 provinces with Helen Zille’s DA winning an outright majority in the Western Cape.

New president Jacob Zuma will be inaugurated on the May 9.

Is the Property Market Bottoming Out?

2009-04-20T00:57:00.000-07:00

The information in this article is courtesy of Business Report (House Market Nears Bottom – Bond Choice – 17 April 2009).

One of South Africa’s biggest mortgage originators suggests that the residential property market is bottoming out.

Richard Gray, CEO of Bond Choice said this can be seen in the increasing volume of applications they have submitted to banks as well as the improvement in approval rate. He added that the around 2000 estate agencies with whom they deal are of the opinion that the market was not getting worse.

Although Gray are feeling positive about the market he still sees large deposits required by banks as the biggest knock to the market, as prospective buyers didn’t have the cash to put down.

Another large bond originator in South Africa, ooba, said that recovery in the housing market was imminent, although they can’t say that it will happen in the second half of this year or next year.

Saul Greffen, MD of ooba, recons that if the appetite of banks to lend increases, the recovery will happen quicker. He added that their bond application volume and bank approval rate had continued to deteriorate from July until February, although it has been stable for the past 2 months.

Jacques du Toit, senior property analyst at Absa believes a turnaround in the market is still a long way off. He recons that the full effect of interest rate reductions can not yet be seen as the household sector are still under financial pressure.

"I don't see the market turning in the near future," Du Toit said. "It may level out but not turn up. It might start recovering later this year, but I only see price growth and increased levels of activity early in 2010."

John Loos, property strategist at FNB Home Loans believes that the improved activity in the market shown by the FNB property barometer recently, is a result of interest rate cuts and improvement in affordability.

Oversupply and financial pressure are still the biggest reasons why demand won’t translate into price deflation, according to Loos. He expects house prices to decrease in 2010.

Apply for a bond online

Property Upgrades: Don’t Over-Capitalise

2009-04-17T01:16:00.000-07:00

The information in this article is courtesy of iAfrica (Don’t over-capitalise – 17 April 2009).

A large number of homeowners are opting to improve their current properties as oppose to trying to sell in these tough economic times not to mention the weak property market. This in itself is not a bad investment, but risks of over-capitalisation are much higher now with the house price deflation currently felt by South Africans and around the world.

Rob Stefanutto of Lew Greffen Sotheby’s International Realty says that the years of whirlwind growth in house prices have allowed people to overspend on finishes for investment homes and get away with it. These days it is vital to assess the value of the property in terms of the suburb in which it is located before making decisions on where within the house to spend their money.

He adds that it might take several years to be recouped for the investment so it is essential to make sure that upgrades are well considered and well executed.

Stefanutto explains that the best return on investment is often “invisible” improvements, which includes wiring, plumbing, roofing and other structural upgrades. These improvements are vastly more expensive than visible upgrades like Italian kitchens and creative décor but it will add to the longevity of the property.

If you are planning on structural upgrades it is important to keep in mind that you investment might take around 5 years to show return – so be prepared to stay put.

Installing proper security systems, according to Stefanutto, is another way to add value to your property. Carports and good plumbing are also on his list of ways to improve the value of your house. Good quality paint that can maintain its look over 7 years is also a sound investment.

Stefanutto concludes by warning that the time where expensive home decorating can be made up thanks to price escalation, is over. He warned homeowners that the time it takes these days to make a return has lengthened considerably.

No Worries for Foreigners Buying in SA

2009-04-15T07:04:00.001-07:00

The information in this article is courtesy of iAfrica (SA is Easy – 14 April 2009).

With South Africa’s diverse landscapes, excellent climate and favorable exchange rates, it’s no surprise that a large amount of foreigners opt to invest in this beautiful country. There are however also many foreigners that think that it is extremely difficult to buy property in South Africa, but the contrary is that it is actually a hassle-free process.

Tony Clark, MD of Rawson Properties, explains that should a foreign buyer decide not to purchase a property in his/her own name, the purchase vehicle must nevertheless be locally registered an it must comply with South African laws. This does however not prevent a purchase made in the name of an overseas company or trust.

Also, Clark added, non-residents are allowed to buy South African property over the Internet and it is not essential that buyers should be in the country to finalise the deal. This means that transfers and bond documents can be signed overseas and should be done in the presence of a notary public of at the local South African embassy.

According to Clark foreigner buyers are allowed to raise bonds in South Africa even if they are not intending to live in SA. The bond is however limited to 50% of the total sale price. The other 50% can come from a bond raised overseas. South Africa’s lending criteria will essentially apply to foreign lenders.

Buyers will also be subject to a FICA (Financial Intelligence Center Act) investigation, the purpose of which is to ascertain that the funds used have been legally acquired.

The South African law states that foreign residents buying in South Africa are exempt from South African income tax and overseas earnings, meaning foreigners only pay on money they earn in S.A.

In essences, Clark said, this means that South Africa is one of the friendliest places to buy property and local legal professionals are adequately trained to ensure a smooth transfer of ownership.

Buy Cape property

Turning Your Home Into A Guest House for 2010

2009-04-08T01:14:00.000-07:00

This information in this article is courtesy of The Property Magazine (Things to consider before turning your home into a guesthouse for 2010).

The 2010 Soccer World Cup is coming to South Africa and a lot of us are considering renting out rooms in our homes for an extra buck or two. This is a unique once-in-a-lifetime opportunity, which was prompted by the decision by Internationale de Football Association’s (FIFA) first-time decision to allow non-hotel accommodation facilities to be made available during the tournament.

There are, however a number of things to consider before you start prepping rooms in your house for eager soccer fans:

Be very mindful of insurance implications as properties are insured as private dwellings. The moment a property is converted into a guesthouse, the class of insurance changes from private to business. This means that standard household and homeowner cover is invalidated. In layman’s terms this would imply that, should a guest’s possessions be stolen or if the room should be burn to the ground, you as the homeowner would be responsible for the damages. You would even be responsible for medical cost should a guest fall in the shower or hurt him/herself in any way.

Changing your insurance from private to business is all but an easy task. A business needs to be registered before you can get insurance cover and this means separate bank accounts, registration with SARS for income tax etc.

Another point to consider is that MATCH Event Services – an events company hired by FIFA to secure a minimum of 55 000 rooms for 20101 in both the hotel and non-hotel industries - stipulates that facilities need to be officially graded in order to be contracted as accredited service providers. If you want to be contracted, the rooms in your house need to be available for the entire duration of the tournament, without any form of a guarantee in terms of secured guests and listing an ad would come out of your own pocket.

Don’t be over eager - make sure you weigh all options and cost before you make the decision to convert your property into a guesthouse.

For more information visit http://www.match-ag.com/accommodation.html

Buy Garden Route property

The Top 10 List of Most Expensive Property Markets

2009-04-07T01:47:00.000-07:00

(The Global Property Guide compiled this list based on a 120 sq. m. apartment in city-centre of these cities)

The most expensive property market is without a doubt Monte Carlo in Monaco with property prices more than twice as expensive as the runner-up. The average cost of property in Monte Carlo is R434,931 per square meter.

Coming in at number 2 is the Russian capital, Moscow, costing an average of R190,643 per square meter, closely followed by London, UK with an average price tag of R189,773 per square meter.

The two Asian cities of Tokyo and Hong Kong take fourth and fifth place. Tokyo has an average property price of R164,557 per square meter and Hong Kong R147,432 per square meter.

The US has one entry on the top 10 list of most expensive property markets with New York’s property prices averaging a staggering R136,171 per square meter.

Paris, France comes in at number 7 with property in this city costing around R110,883 per square meter followed by Singapore where a property will cost you an average of R88,669 per square meter.

Italy's property makes an entry at number 9 with an average price of R83,775 and wrapping up the top 10 is Mumbai in India with property costing an average of R83,752 per square meter.

House Prices Keeps Dropping

2009-04-02T05:13:00.000-07:00

The information in this article is courtesy of iAfrica (March House Prices Down – April 1 2009).

The latest FNB house price index shows that house prices are down by 7.8% year-on-year in March after declining by 6.2% year-on-year in February.

Johan Loos explained that the weak economic environment is contributing to a significant amount of ‘offloading’ of property with the FNB Property Barometer survey reporting estate agents’ estimates that about 26% of total sellers are selling in order to downscale due to financial pressure.

According to Loos, this means that it remains likely that the current situation of national year-on-year house price decline will continue for most of 2009.

The index shows that the first quarter of 2009 showed that a freehold two-bedroom house stands at R315 468, declining by 13.2% year-on-year.

The average price of a sectional title ‘two-bedroom and less’ market continued to fair considerably better than freehold property with three-bedroom seeing most of its recent price deflation coming to an end.

Loos predicts that this year-on-year price deflation is expected to be with us for most of the year until such time as oversupplies are mopped.

Buy Durban property

Increased Property Enquiries From Expats

2009-03-31T00:07:00.000-07:00

The information in this article is courtesy of Realestateweb (Expatriates desire to return home within 24 months – 26 March 2009).

The amount of enquiries received from South Africans living abroad shows that the international meltdown is urging expats to return home.

A number of realtors have already indicated that they are currently seeing increased interest from expats on their websites. According to Seeff most of the expats who visited their stand at the recent Homecoming Revolution held in London, indicated that they want to return home within the next 2 years.

Seeff’s general manager, Emarie Campbell attributed the change of heart to South African who previously held secure positions and earned good money, but now faces cutbacks or retrenchments due to tough economic conditions.

Most of these South African said that they need to sell their properties first before they return home although some are still concern about the unpopular Black Economic Empowerment policies and crime.

Campbell explained that in contrast to this, they have seen a drop in Europeans looking for second or holiday homes in South Africa.

Expats returning home are also fuelling the rental market and favourable exchange rates make it easier for them to stomach banks’ strict lending criteria.

Buy Cape Town Property

Mboweni Announces 100-Basis Point Cut

2009-03-25T01:39:00.001-07:00

The information in this article is courtesy of iAfrica (Hundereds, Bru! – 24 March 2009)

Governor Tito Mboweni announced yesterday that the repo rate would be cut by 100 basis points to 9.5%, while the prime lending rate has been reduced to 13%.

Mboweni explained that the decision was made due to the weakening economy as a result of the turmoil in the financial markets.

"Against this backdrop of widening domestic and global output gaps, the balance of risks to the inflation outlook has changed somewhat," he said.

According to Mboweni, the inflation measured 8.1% in January 2009. Food and non-alcoholic beverages contributed 2.4 percentage points to the total inflation while housing utilities contributed 2.1 percentage points of the total inflation.

He warned, however, that even though the central bank would hold more frequent policy meetings, it did not imply that rates would be cut every month.

The cut is in line with market expectations with 24 of 28 economists polled by Reuters last week predicting a 100 basis point reduction.

Buy West Coast Property

Rate Cut To Be Announced

2009-03-24T06:26:00.000-07:00

The information in this article is courtesy of the Cape Times (Another 1% rate cut on the cards – 24 March 2009)

A 100 basis point cut is on the card as the central bank end their 2-day meeting today. This comes after growth has slowed down significantly, causing a looming recession.

Earlier this month it was also decided that the policy meeting would take place every month for the rest of the year.

According to Reuters, 24 out of 28 polled economist predicted a full percentage point cut in the repo rate to 9.5%, while 3 forecast a 150 point drop. One of the economists predicts a 50 point cut to kick off smaller cuts spread through the year.

December 2008 saw a 50 basis point cut and last month the committee decided on a 100 basis point cut.

The rate cut would be based on hard hit exports on resources and vehicles and a sharp decline in manufacturing. Output fell by 11.1% year on year in January and mining output and tight household budget have put South Africa on course for its first recession in 17 years.

Absa Capital says that it is likely that the Reserve Bank will cut the interest rate with 150 basis points.

Buy Durban Property

Barometer Shows Rise in Property Demand

2009-03-23T04:56:00.000-07:00

The information in this article is courtesy of iAfrica (Property demand improves – 23 March 2009)

The FNB Residential Property Barometer has shown a mild improvement in property demand levels, although it still indicates a rather unconvincing picture.

The Property Barometer surveyed a sample of the estate agents from major cities of South Africa and asked questions related to the demand they are experiencing on a scale from 1-10. The third quarter of 2008 stood at a record low average of 4.1 but rose in the final quarter to 4.6 and according to the Barometer the first quarter of 2009 stands at 4.8.

Of the surveyed agents, 41% believed that further strengthening in demand might be experienced in the following quarter, showing that agents are feeling positive about the near future.

Another survey showed that 33% of respondents feel positive about interest rate cuts, although 31% still believe that banks’ lending criteria is still too high and deposits required are making it hard to buy property. Also, 19% of the agents felt the air of general pessimism was still a problem – referring to the global economic crisis and job losses.

FNB Property Strategist, John Loos, says that one should not expect residential demand to skyrocket as it did in 2003/04 as interest rates fell rapidly, because 2003 rate cuts were accompanied by a very positive economic growth and employment situation at the time. He added that strict lending criteria are not set to ease dramatically any time soon but interest rate cuts should improve affordability.

Buy Overberg property

New MPC Meeting Schedule

2009-03-19T00:23:00.000-07:00

The information in this article is courtesy of iAfrica (Urgent MPC Meeting called – 18 March 2009)

Tito Mboweni, governor of the South African central bank, announced yesterday that the Monetary Policy Committee would meet on 23 and 24 March and then again on 29 and 30 April. These new dates are in line with market expectations and differ from the previously scheduled meeting of 15 and 16 April.

These new dates were probably set due to the deteriorating economic picture and job losses. More meetings will also follow in May and June, before a break in July.

According to Mboweni’s statement the MPC of the South Africa Reserve Bank will from now onwards meet on the new March and April dates as well as 27,28 May, 21,22 September, 16,17 November and 16,17 December. The fixed dates of 24 and 25 June stays as does the fixed date of 12 and 13 August and 21 and 22 October.

In the past, the MPC would meet every two months, so the new schedule is a clear indication of the need for urgent rate cuts. This also means that January and July the only month that will not see a meeting.

Buy Randburg property

Popular Tourist Destination Affected by Credit Crunch

2009-03-16T00:21:00.000-07:00

The information in this article is courtesy of IOL News (Crunch Turns Waterfront Into Sore Eye – 14 March 2009)

Tenants at the popular V&A Waterfront in Cape Town are having trouble keeping up with the increasing rent, and on top of this, the credit crunch is making it harder for shop owners to do business. Even visitors are complaining that the centre of this popular tourist destination is looking shabby and in need of maintenance.

Thus far, two shops have closed their doors and one tenant was evicted for failing to pay rental arrears. One tenant believes that there is not a single tenant that is not affected, and at this rate management might lose some important anchor tenants.

The property was bought by London and Regional and Dubai World for a staggering R7.3 billion back in 2006. Recently, several new developments at the Waterfront have been put on hold.

According to a shop owner, South Africans are spending a lot less and even though there were tourists, it is not near as much as previous years.

According to spokesperson, Maureen Thompson, rentals at the Waterfront were not way above market related prices and new tenants had already signed up for empty shops. She added that the developments on hold are a result of the global recession.

A concerned South African, now living in the UK, said he was appalled by the state of the Waterfront on a recent visit. According to him litter was floating on the water and he was worried that the historic Clock Tower was used by a restaurant for serving food.

Thompson raised the issue with the harbour master and he urged the owner of Emily’s restaurant to make an alternative plan.

Buy Roodepoort Property

Economist, Debt Counsellors Calling for Rate Cut

2009-03-11T00:28:00.000-07:00

The information in this article is courtesy of iAfrica (Cut Interest Rates Now! – 11 March 2009)

Andre Snyman, CEO of Consumer Assist told iAfrica that growing debt is rapidly putting an increasing strain on consumers, banks, retailers and other financial institutions. He emphasized that interest rates must be cut by 2%.

Snyman is not alone in his plea, with economists and debt counselor around the country calling for a 200 basis point cut.

Snyman added that many consumers need just a little leeway for them to manage and an interest rate cut could avoid cash-strapped consumers losing their homes and cars.

According to Snyman heavily indebted people are coming from all walks of life and simply can’t cope anymore. These people are not paying school fees, which in turn causes difficulty with the financing of schools. It also causes health problems and depression.

Snyman said that should interest rates remain the same, South Africa will have to face the knock-on effects of seriously indebted people including fraud, corruption, low productivity, poor health, marital problems etc.

Buy property in Randburg

Rate Cut Needed to Kick-Start Market

2009-03-09T00:45:00.000-07:00

The information in this article is courtesy of Fin24 ( SA house market on edge – 9 March 2009)

A cut in the interest rate is what South Africa needs to kick-start the troubled property market.

According to John Loos, property analyst at FNB Home Loans, rate cuts could avoid the market from finding itself in a similar position as that of overseas markets. At the moment the UK and South Africa are experiencing the same difficulties such as strict lending criteria and rising unemployment, but the major difference is that our interest rate has room to fall and stimulate our housing market somewhat. The UK, on the other hand, doesn’t have this luxury with there interest rate standing at an all time low of 0.5% against South Africa’s 10,5%.

The UK is also struggling with house prices falling throughout the country by 17.7% on an annual basis. The latest statistics show that South Africa’s house prices declined by 6.6% on an annual basis.

Loos recons that an interest rate cut could have a positive effect on the market but he warns that South Africa’s economy is as exposed to global conditions as other markets.

iAfrica reports that the “cut off” for a potential inter-meeting MPC rate cut will probably come with next Thursday’s manufacturing production release. This could result in at least a 100 basis point rate reduction ahead of the official 16 April announcement, according to Atlantic Asset Management

Buy West Coast property

Global Property Market Weakens

2009-03-05T23:15:00.000-08:00

The information in this article is courtesy of Realestateweb (Global property market in tatters – 6 March 2009)

South Africa has not been hit as hard by die global economic meltdown as most other countries, but the property market has certainly seen better days.

The credit crunch has affected almost every property market in the world, including South Africa and Absa’s latest price index shows that prices as dipping fast. Absa puts the nominal year-on-year decrease of a middle segment house at about 1,3% for February, down to R950 800. FNB’s estimate is –7% and Standard Bank’s –2%.

Knight Frank House Price Index for the last quarter of 2008 ranks South Africa as number 17 out of 42 countries in terms of residential property returns. Dubai came in first, but analysts predict that this year will be a different story all together.

At the bottom of the list were Latvia, the United Kingdom, Iceland, the USA and Ireland.

Knight Frank said that these figures show that no country will escape unscathed by the global financial crisis. South Africa is particularly vulnerable at this stage.

“Despite higher gold prices, weaker mineral exports are causing its current-account deficit to swell, possibly to more than 10% of GDP (Gross Domestic Product) this year, at the same time as net foreign direct investment is expected to slump, so the country needs to borrow even more," said The Economist.

Nicholas Barnes, head of international residential research at Knight Frank said that predicting how much further market will fall in 2009 is virtually impossible.

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Expats Fuel Cape Property Market

2009-03-04T23:29:00.000-08:00

This article is courtesy of iAfrica (Expats boosts CT property – 4 March 2009)

iAfrica report that expats returning to South Africa are fuelling rentals as well as sales in Cape Town.

This is according to Lanice Steward, MD of Anne Porter Knight Frank who added that this could largely be contributed to the economical woes that most countries are currently experiencing.

Steward said that around 3% of their buyers are expats returning to South Africa. These buyers are capable of paying large deposits or buying property with one check, meaning the National Credit Act are not holding them back.

Another trend, according to Steward, is retirees from the UK and EU coming to South Africa to take advantage of the current exchange rate that is giving them incredible value for their money.

Pam Golding’s Western Cape Rentals Director, Dexter Leite, explained that they have seen an upswing in rental activity across Cape Town. This is due to higher interest rates and tough lending criteria. Returning expats are also contributing to this upswing as they are opting to rent while evaluating their needs and searching for a home.

Leite added that retired visitors are also choosing to rent while they consider the possibility of settling here permanently.

Gerhard Kotze, CEO of Era South Africa, agrees with this saying that any South African equipped with sterling, euros or dollars is bonus for the property market.

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House Prices Shrinking Fast

2009-03-02T23:38:00.000-08:00

This article is courtesy of Realestateweb (House prices fall even faster than expected – 2 March 2009)

Worrisome statistics show that the value of your home is 7% less than last year this time – and it is bound to get even worse. More shocking is the fact that this situation is a result or a decline in demand back in 2007, making one wonder what a recession might do to property values.

February saw house price deflation gather momentum, from a January revised rate of -4,7% to – 6,9% last month according to FNB home loans strategist John Loos. He recons the decline is not far off 12%.

FNB believes the prime interest rate could be down to around 11% before the end of the year, which should stimulate demand in a credit driven market. However. they also believe that the house price deflation will probably get worse before it gets better.

The average house price according to FNB sits at R706 000 in February 2009 while February 2008 saw the average house price at around R758 000. The longer-term picture looks better, with the average house price in February 2001 at R269 000, about R415 000 in February 2004 and climbing to R617 000 by 2006.

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Interest Rate Cut At Hand

2009-02-24T23:12:00.000-08:00

The information in this article is courtesy of iAfrica ( GDP data fuels rate cut – 25 February 2009)

According to Rian Le Roux, economist at Old Mutual Investment Group South Africa (OMIGSA), there is a good chance that South Africa’s Reserve Bank will lower the interest rates yet again. This decision could be made by as early as the end of this week.

This comes after the economy decline for the first time in a decade in the last quarter of 2008, with the GDP shrinking by 1.8 percent quarter-on-quarter on a seasonally adjusted and annualised basis, from 0.2 percent growth in the third quarter.

The data confirm that the economy had been hard hit by the combination of the rise interest rates during August 2006 not to mention the recent global economic slump, said Le Roux. He added that investors should avoid over-reacting to this news and he further advised that they should focus on the long-term picture because things could’ve been worse as they had expected an even lower decline in GDP of –2.0%.

While the global economic slowdown will continue to negatively affect South African exporters, it will also give local companies a reason to cancel any capital expansion plans.

Le Roux is however positive that consumers should experience some relief in the months to come.

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SA Property Market Recovery Being Hampered

2009-02-23T22:59:00.000-08:00

PropertyWire, a premier global property news service, reports that South Africa has not been hit as hard as some international real estate sectors but there are factors that are hampering the recovery of the property market.

Although the residential market is going through a tough patch, the commercial sector in cities like Cape Town and Johannesburg shows promise, with several office developments due for completion in 2011. This is according to Colliers International Property that also says that the commercial sector remains the most important property business in the cities.

Sanett Uys, director of Colliers International Property and Facilities Management says that the South African property market was not hit as hard as some of the other international markets, but a number of factors, like the shortage of power followed by weak household demand, the lack of liquidity and the global downturn, are going to inhibit a turnaround until 2010.

Uys added that the property market’s exposure to foreign investment is limited, liquidity is restricted since the banks are not eager to lend and property fundamentals are still strong.

According to Colliers, 2009 might be an interesting one with the economic slowdown continuing to impact the property market. However, economists are predicting a turnaround in 2010 with economic growth bouncing back to 5.3%.

Although some areas have been hit hard by the downward market trends, experts are urging seller in these areas to try and hold on to their properties until the market recovers rather than to sell now at a loss.

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R35bn Development for Lanseria Airport

2009-02-18T23:48:00.000-08:00

The information in this article is courtesy of Fin24 (Lanseria to get R35bn 'city' – 18 February 2009)

Lanseria International Airport will be the address of a massive mixed-use precinct said to be three times the size of the Sandton central business district.

Known only as the Cradle City, this project will comprise about 10 million m² of development bulk which will be worth an estimated R35bn when completed – the biggest single property development for Gauteng.

Developers Amari Land says that the idea is to create a complete city centre around Lanseria, which will embrace new urban design principles by integrating living, working, playing, trade and travel.

Markus Kaps, development director, says the project enjoys “the highest level of provincial and local government support”.

Developement of the first phase, including 450 000m² of business park combining industrial, office, retail and hotel components, is set to start in May 2009. The second phase will be a mixed-use area, including medium- and high-density houses as well as commercial and rental opportunities.

The total project, including all its 6 phases, is set to be rolled out over seven years.

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Mortgage Stress Intensifies

2009-02-17T23:25:00.000-08:00

The information in this article is courtesy of Business Report(Mortgage stress escalates as negative equity takes hold – 17 February 2009)

According to Auction Alliance, the number of mortgage bondholders in South Africa experiencing difficulty in paying their bonds escalated from 8000 in the second quarter of last year to 35 000 in the fourth quarter. These bondholders are defined as being more than four months in arrears on their payments.

Real Levitt, chief executive of Auction Alliance says that 80% of these bondholders are likely to sell or lose their homes – voluntarily or forcibly.

One in 15 homes is in negative equity, where the value of the outstanding balance on the mortgage was higher than the current market value of the home. Levitt added that such bondholders were caught in a debt trap. This has increase to one in 20 homes two quarter ago.

Levitt explained that negative equity figures were based on homes that were currently on the market, but should be treated with caution because they were not representative of the total housing market. He added that South Africa has joined an international landslide in the property market since the market is now in the third quarter of a technical recession that has intensified since November 2008.

Aggressive interest rates, according to Levitt, could be the answer to alleviating the severe mortgage stress.

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12% of SA Failing to Pay Rent

2009-02-16T23:22:00.000-08:00

Landlords Struggle to Collect Rent

The information in this article is courtesy of Realestateweb ( SA’s worst and best tenants – 16 February 2009)

According to the Tenant Profile Network (TPN), the fourth quarter of 2008 saw 54% of tenants pay their monthly rental on time. The third quarter showed a similar figure.

Michelle Dickens, managing director of TNP, says the national average is 12% of tenants who cannot meet the their rental commitments at all. Also, 60% of leases obtain only 0,5 to 0,75% rent value as a percentage of the market value. This is bad news for investors who are left with a shortfall on their mortgages and levy payments.

Of the entire county, Kwa-Zulu Natal had the worst performance, with 18% of tenants failing to pay rent. Both the Eastern Cape and Gauteng recorded 10% each while the Western Cape had only 8%.

It seems like tenants paying R3000-R7000 income bracket are more likely to meet their commitments with an average of 61% making regular or full payments. Problems with rent not paid on time usually persist in the rental price bracket of R5000-R8000.

· TPN is a credit bureau which provides credit screening and reports for the rental property market.

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CGT Boost for Property Market – Budget 2009

2009-02-11T23:30:00.000-08:00

The information in this article is courtesy of Realestateweb (Property market gets CGT boost – 11 February 2009)

Thanks to Finance Minister, Trevor Manuel, home sellers can expect a tax boost. This comes after the 2009 Budget Speech revealed that government will be raising the capital gains tax (CGT) exclusion on the sale of primary residences to a gross value of R2m form R1,5m. Manuel also intends to make the calculation simpler and reduce the compliance burden by basing the CGT calculation on gross proceeds.

At the moment CGT is applicable on primary residence sold for more than R1.5m and is calculated as a percentage of the gain.

The National Treasury in Budget states that the capital gains tax regime contains several exclusions designed to reduce the tax burden for lower-and middle-income earners. One such exclusion is for an individual’s primary residence: a capital gain or loss of up to R1.5m upon the disposal of such a residence is excluded from taxable capital gains.

This means that the taxpayer would have a better understanding of how the exclusion applies on disposal, without resorting to complex capital gain calculations. However, the capital gains tax exclusion will fully apply to the primary residence up to a gross value of R2m, according to the Treasury.

As a result, people selling their primary residence with a gross value below R2m will not be liable for capital gains tax. For primary residences valued above this threshold the normal rules - including the current R1.5m capital gain or loss exclusion – will apply.

The property market will also be influence by the annual exclusion ceiling for capital tax and losses that went up from R16 000 to R17 000 for individuals.

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R36.54m Paid for House in Bantry Bay

2009-02-10T23:58:00.000-08:00

This information in this article is courtesy of Realestateweb (Bantry Bay property sold for R36,5m – 9 February 2009)

Pam Golding Properties has secured the highest ever price paid for a house in Bantry Bay - R36.54 million. This luxury home is situated on a rare half-acre plot, with over 1000m² space. The previous record of R30 million was achieved last year.

According to Basil Moraitis, manager of PGP Atlantic Seaboard and City Bowl, the buyers are a young couple from the UK who intend to use this residence as their summer home. The house is situated among other celebrity homes and is completely sheltered from the Cape South-Easter.

Moraitis said that the house was sold within 4 weeks of listing, despite the current market conditions. According to him this is testament to the fact that accurate pricing is more important than ever in today’s market.

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Rental Demand Still Rising

2009-02-08T23:32:00.000-08:00

(The information in this article is courtesy of BusinessDay - Rents rise as property market slows – 4 February 2009)

The Trafalgar rental index show that rent rose by around 13% from January to December last year. This can mainly be contributed to the to stricter lending criteria in the last quarter of 2008, urging people who were unable to get a home loan approve, to rent.

According to Samual Seeff, CEO of Seeff Properties, these strict lending criteria will sustain higher rental demand throughout 2009.

The index also showed regional increases ranging from 9% in Johannesburg to 21% in Port Elizabeth. Cape Town rental prices rose 11%, KwaZulu-Natal rose 14,5% and rents in East London were 15% higher than December 2007. Pretoria rents rose 16%.

According to Seeff it is expected that inflation and the interest rate environment will improve, however customers will use the opportunity to improve household debt situation and other obligations before buying a house.

Barry Everitt, MD of Chas Everitt International, says banks will basically determine where the rental market goes this year. He says the property market will continue to have a tough year as long as banks continue to tighten their lending criteria.

Trafalgar MD Andrew Schaefer warned investors not to increase rent too fast in difficult times - where cash flow is far more valuable than profit.

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Interest Rate Gets Chopped

2009-02-05T23:26:00.000-08:00

This information in this article is courtesy of Realestateweb (Mboweni's big chop: what it means for you – 6 February 2009)

South Africa’s interest rate now stands at 11,5%. This comes after the South African Reserve Bank governor, Tito Mboweni, announced that they've shaved a 100 basis points of the previous rate. More good news is that more cuts are expected.

What this really means is that mortgages payers can expect to save R366 on a R500 000 home (20 year term) and R733 on a mortgage of R1m (20 year term).

Although this does not mean the property market has reach the bottom of the cycle, it does show confidence in the market.

According to Saul Greffen, chief executive of mortgage originator Ooba, tight lending criteria continues to be a problem.

"We are hoping that banks will begin to relax their lending policies and this, coupled with home owners' ability to afford more, should begin to revive the property market," he said.

Herschel Jawitz CEO of Jawitz Properties believes our biggest challenge is consumer confidence. According to him confidence will remain low as long as people are concern about job security, making repayments and keeping their heads above water.

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Emigration-Motivated Property Sales Down

2009-02-03T23:12:00.000-08:00

The information in this article is courtesy of Business Day (Fewer emigrants selling their homes - 29 January 2009)

It seems that most South Africans has come to except the political changes in the country. This can be seen in the decline of people selling their homes to emigrate form a peak of 20% in the 3rd quarter of last year to 14% in the final quarter.

According to FNB Home Loans the number of foreign buyers in South Africa stands at a total of 6% - with the majority of these buyers being from Africa. This means that there has been a drop in the number of European and American buyers.

John Loos, property strategist at FNB Home Loan said that the high number of South Africans emigrating during the first half of 2008 can be explain by the negative sentiment following the change in leadership of the ANC, the Eskom power crises and the problems in Zimbabwe.

Loos added that the global economical crisis has also played a role in the fall of emigration-motivated property sales. South Africans are definitely thinking twice before moving to the UK, which are at the moment entering a recession. This might also mean that we could see the return of a large number of expatriates. The poor economical conditions might also explain the drop in the number of European and American buyers since they are now re-prioritising spending.

The property barometer also indicated that the number of investment properties sold below the seller’s original purchase price has risen from 12% during the third quarter of last year to 19% in the last quarter.

On a more positive note, the barometer also showed that the average time a property was on the market improved from 20 weeks and a day to 15 weeks and three days. The number of first-time buyers also improved from 12% to 17% and the buy-to-let market declined from 14% to 12 %.

According to the property barometer the reason for selling houses still remains downscaling due to financial pressure.

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Western Cape Market Prices Hold – Sotheby’s

2009-01-26T23:23:00.000-08:00

The Western Cape property market is looking up according to a recent analysis by Sotheby’s International Realty South Africa. The analysis shows that while the residential property price ranger recorded a 35% drop in turnover for the Western Cape market for the first 6 months of 2008 – from R12b-R8b – and a 45% drop in units sold – from 7500 units to 4100 units – average prices actually increase by 19% - from R1,67m to R1,99m.

According to Barak Greffen, executive director of Sotheby’s International, this increase can be attributed to a large number of transactions in the upper segment of the market, and less in the lower market. This led the data to reflect an increase in prices.

Last year saw some hefty sales, the most significant being a R24m Clifton sale, R24m Granger Bay sale and a R23m Bantry Bay sale.

During the last 3 months of 2008 over 100 units of property were sold for R476m in the Atlantic Seaboard at an average price of close to R4m. This shows that there was still demand for property in highly sough-after areas.

Greffen finished by saying that savvy buyers have been waiting for the market correction to pick up the top-end properties from realistic sellers at market related prices, in order to gear up for the next upward cycle in the market.

The information in this article is courtesy of EngineeringNews (Western Cape property volumes down, but prices hold – Sothebys - 25 January 2009)

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SA Property Market Could Recover After Cut

2009-01-22T23:30:00.000-08:00

Home buyers and owners in South Africa are in for some good news should the Monetary Policy Committee decide to cut the repo rate by a full 100 basis points in February. This would mean a drop of nearly R1000 per month in bond repayments for each R1 million of bonds held.

The repo rate is the rate at which the Reserve Bank lends money to commercial banks. It peaked at 12% in August before finally being cut by 50 basis points in December. At the moment it stands at 11.5%, with prime at 15%.

According to Brain Falconer, MD of Colliers International’s residential division, the near halving of the petrol price and the sharp drop in inflation have given the bank all the reason it needs to make meaningful interest rate cuts. He added that this would be the “best possible move for the local economy”.

“A cut would also slow down the destructive cycle of bank repossessions and encourage more people to enter the property market.”

This would significantly help the 5% of homeowners in a negative equity position recorded at the end of last year, and around 130 000 homeowners in trouble with their bonds.

Information in the article is courtesy of Daily Dispatch Online (Cut of 100 points would revive housing market – 22 January 2009)

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Worst Property Market in 12 Years

2009-01-20T23:47:00.000-08:00

The South African residential property market has reached a 12 year low. This comes after Standard Bank released it median house price index on Tuesday 20 January 2009.

According to the index there has been a 3.1% decrease year-on-year in December, which brings the average annual decline in 2008 to 0,3%. This, according to Standard Bank is a result of economic growth virtually came to a standstill in the third quarter of last year, meaning consumers came under a lot of stress, which in all led to the worst property market in 12 years.

This was worsened by the international economic environment experiencing its worst recession in 80 years.

Last year we saw high oil prices threatening to result in runaway inflation and commodity prices collapsing towards the end of the year. The combination of sharply declining commodity prices and weak demand resulted in inflation falling rapidly in many countries around the world.

According to Standard Bank job layoffs were on the increase as businesses found it difficult to cope with the tough economic conditions, which led to further stain on the property market.

"Clearly, the combination of slow growth, relatively high interest rates, punitive debt levels and still high inflation, in a general environment of plunging confidence, will impact negatively on many segments of the economy, including the residential property market," the bank noted.

On the bright side, Standard Bank stated that they expect interest rate cuts of up to 250 basis points during 2009.

The information in this article is courtesy of Mail&Guardian (SA House Market at 12 Year Low – 20 January 2009)

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A List of Things to Remember When Moving House

2009-01-19T23:43:00.001-08:00

Moving house can be a particularly stressful and busy period in one’s life. There are so many things that need to be taken care of and it’s no wonder that people forget even the most obvious, such as letting people know your change of address.
SAHometraders has compiled a list of the 10 most important people and service providers who need to know that you’ve moved home:

1. Inform your utility providers

* If you have DSTV then it’s important to let your provider know your change of address. The same applies if you have a landline and hold an account with Telkom. Your water, electricity and gas providers need to be aware of your new address so that you don’t have the hassle of being billed in the wrong place and then generating unnecessary debt.

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2. Let your insurance company know

* We live in a day and age when crime is rife; the unexpected is always possible and consequently we need to insure all of our property, including our home. When you move to a new address, you need to alert your health, car, house and life insurance provider of the change in living situation.

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3. Alert medical and dental professionals

* Many individuals and families make use of a private doctor and dentist, which means that they will need your new address to update the details that they already have on file.

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4. Make other professional service providers aware

* Do you have an insurance broker, lawyer or chartered accountant that deals with you personally? It’s professional courtesy to alert these service providers about your current home address, in case they need to send you any important correspondence in the future.

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5. Government officials should be informed

* If you are a member of the local library or have a personal box at the post office then it’s important that you let the relevant people know about your new address.
* More importantly though, you should advise the South African Revenue Service (SARS) of your current situation, as it’s necessary for their files to be as up to date as possible.

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6. Change all your business accounts

* Everyone has a bank account, so the first logical step would be to inform your banking institution of your recent change in address. Most banks require a utility bill or a copy of the deed of sale or lease agreement as proof of address, so it might help to keep this in mind.
* Considering that everyone has a cell phone these days, it would also be wise to let your cell phone service provider know your new address, so that there isn’t any mix up with the billing each month.
* Think about whether you have an account with a service station, chemist, laundry or any other retailer and then let them know you’re in the process of moving house or have moved to a new address.

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7. Do you belong to any clubs?

* With society more and more focused on leading a healthy lifestyle, it’s not unusual for individuals, couples or families to take out a gym membership at any one of the many clubs around the country. It would serve you well to let your gym know that you’ll be moving and see whether it can be arranged to transfer your membership to a closer branch if necessary.

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8. Update all of your subscriptions

* For the sake of convenience, many people choose to take out subscriptions on magazines, newspapers and other related media sources, so it would a good idea to inform the various subscriptions of your new address. This way, you won’t have to miss getting your favourite daily newspaper or magazine.

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9. Inform your business associates

* When your business relies on associates being able to find you at home then it would certainly be courteous to let them know of any change in address.
* This also applies to your children’s school, which is particularly important in case there is some kind of emergency and they are unable to get hold of you telephonically.

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10. Keep friends and relatives up-to-date

* Last, but certainly not least, your friends and relatives should be informed of your new whereabouts, particularly when it comes to those overseas who send Christmas and Birthday cards each year. Remember to let them know any change in home phone number as well.

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Buy-to-Rent Property – Appealing Investment

2009-01-18T23:16:00.000-08:00

With banks asking deposits on home loans, South African property owners can expect rental demand to increase significantly. Absa Home Loans’ Head Luthando Vutula says that it might take some time for banks to return to deposit-free home loans, resulting in people opting to rent rather than buy, and with interest rate set to fall this year, investors might find the buy-to-rent property more appealing.

The hike in rental demand can already be seen according to Trafalgar – South Africa’s national residential property managers. According to their CEO, Andrew Schaefer they kept their offices well staffed over the holiday to be ready for higher demand, although activity was slightly below last December’s.

However, some experts like Absa’s Gavin Opperman says that the current investment yield on the asset subclass of 0.4 percent to 0.6 percent per month of the value will have to change.

Valuer Erwin Rode and FNB property strategist John Loos also say yields would have to rise to somewhere between 6 percent and 8 percent per year.

"Residential property is easier to buy, to understand and to finance than commercial property, so the yield will be lower than the latter's 10-year yield of 9.2 percent," says Loos.

Rode added that that residential property is dominated by owner-occupiers at lower yields than commercial property. To get to the higher yields, rents will have to rise 30-40% over the next few year or prices will have to fall at that rate.

(The information in this article is courtesy of Business Report – Grab that rental property - 16 January 2009.)

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Tough Market Reduces Agents

2009-01-13T23:59:00.000-08:00

The information in this article is courtesy of RealEstateWeb (Market forces cull more agents – new stats – 14 January 2009)

With the number of estate agents cut by around 20% from 2008 it seems inevitable that this number might become even higher in 2009. RealEstateWeb reports that roughly one in every 4 agents in business in January last year has left the industry.

The Estate Agents Affairs Board (EAAB) has released figures stating that, as of last week, 30 528 existing agents had applied for the Fidelity Fund Certificate (FFC) renewals and almost 28 000 have been issued with their FCC’s. This certificate entitles agents to legally receive commission on sales.

According to the EAAB, 2603 existing agents renewed their FFC’s after the extended deadline on November 30 2008. Of the 43 000 agents that were given FFC last year, 26 000 failed to renew their certificates.

Tough economic conditions have forced agents to leave the industry, that only a few years ago, supplied work to 80 000 – 90 000 people.

Some of the agents left have already started businesses on the side to keep their heads above water. Tony Ferreira of Help-U-Sell in Mpumalanga is among those who have decided to throw in the towel.

There are however those who are staying positive in these tough times. Wilma Smit of Property Voyage in Pretoria said that her agency would definitely take on new agents this year. According to her, the 12 agents at her company did well in 2008.

For those agents who focus mainly on commercial and industrial property, things are looking better.

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Property Expectations for 2009

2009-01-11T23:26:00.000-08:00

iAfrica reports that despite the expectations for lower interest rates and inflation, the outlook for the South African residential property market in 2009 remains bleak.

According to Jacques Du Toit, senior property analyst at Absa, activity in the market are set to stay subdued up to the second half of the year while price in the middle segment of the market may decline by as much as 2.5 percent in nominal terms this year.

This year might also see a further decline in house prices of up to 8%. This is based on projected consumer price inflation trends to drop in nominal prices.

The Absa House Price Index showed on Friday that nominal annual average house price growth in the middle segment of the market slowed down to below 4% in 2008. This was the lowest price growth recorded since 1996.

Because of declined inflation during this year, we might see prime and mortgage interest rates cut by a cumulative 300 basis points during the course of 2009 to reach a level of 12.5% by year-end. Economic conditions are expected to remain depressed for most of the year. In 2008 we saw a 3% real economic growth, but expect a poor 1% growth for 2009.

Last year’s 2.7% real disposable income growth is set to drop to 1.5% for 2009 and house prices are also expected to remain under pressure.

Du Toit said that we could expect some relief toward the middle of 2009, with levels of activity and prices only improving from 2010 onwards.

The information in this article is courtesy of iAfrica (Property in 2009 – 10 January 2009).

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Property Investment: Choose the Right Option

2009-01-07T00:10:00.000-08:00

If you are considering investing in property there are a few options to choose from – all of them offering their own pros and cons.

According to Craig Hallowes, Association of Property Unit Trust spokesperson and Marriot CEO, Simon Pearse it is best to borrow money when the interest rates are at its highest point. This will ensure that you can afford the debt. It is also wise to invest when the property prices are at its lowest, resulting in a bigger return when the prices start increasing again.

The option when choosing a property investment include:
1. Direct Property Ownership
This investment includes buying your own property with the main idea of renting it out. This type of investment offers you full control over the property but lacks liquidity and demands a high entry cost. You also need to actively manage your investment.

2. Joint Venture or Partnership
Here you buy into an investment with the help of other parties. The advantage of this type of investment is that you gain access to higher value properties without paying it on your own. This investment also lacks liquidity and there is little or no diversification of assets. Apart from the low-income yield, there is also the odd chance that you might run into disagreements with your partners.

3. Property Syndication
This is an unlisted investment scheme that enables a group of investors to buy property and become part owners – either directly of indirectly. These schemes can be structured in different ways with a number of cost layers attached to them. This is beneficial because you pay lower individual entry cost as it is spread amongst a group of investors, but can involve very high maintenance costs. Besides the fact that there is no formal market (making it hard to control) there is also scope to manipulate property values. It is hard to exit this type of investment with the liquidity constraints that it offers.

4. Listed Property
This is Property Unit Trusts (PUT’s) and Property Loan Stock (PLS’s), which is effectively REIT’s. These are listed on a financial exchange like the JSE. The benefits of this type of investment are that it is highly liquid and managed by professionals who can select the best properties. This investment offers costs that leaves nothing to implications and protects the investors with a highly regulated market. The only disadvantage is that you can’t control which properties are purchased but you can sell in the very liquid market if you do not like the strategy of the PUT or PLS.

5. Exchange Traded Funds (ETF)
This investment is established as a collective investment scheme much like a unit trust. The aim here is to replicate the price and yield performance of a specified Index as far as possible. These units or shares are generally listed on a financial exchange like the JSE. Benefits include a low entry cost and easy access as well as flexibility. It is highly liquid and transparent in terms of the investment and interest and offers a well-regulated market. The downside is that you can’t manage your portfolio actively should you wish to.

6. Collective Investment Schemes
This evolves a unitised fund set up under a trust deed that allows investors to participate in a larger pool of property assets. This investment is highly liquid and managed by professionals. It offers explicit costs and a considerable diversification of assets both geographically and across sectors – all in a highly regulated market. A disadvantage is steep management fees.

7. Offshore Property
This investment can be made in any of the options above, however the additional dimension of offshore investment diversification is added, for example, property in Paris or London. This diversification is a great benefit as you can spread your risks across different geographical regions. The exchange rate risk is a disadvantage and so is the fact that you might not understand the foreign market and buy into low-quality properties. - Elizabeth McLachlan

Invest in property in South Africa

Student Rentals a Safe Investment

2008-12-29T00:27:00.000-08:00

There is one recession-proof property investment in South Africa that experts swear by – student accommodation.

According to Berry Everitt of Chas Everitt International, the demand for rental units near campuses is growing as student numbers increase year-on-year. Everitt stated that universities are struggling to build additional student residences which means that student are relying on the private sector for housing.

To secure your investment, Everitt said that rent for student accommodation per square meter is higher than residential units. To find a student tenant is also easier with many institutions compiling free property listings, which are distributed at the end of each academic year.

Everitt advised that one should look to invest in property close to the campus, as rates are higher in these areas. At the moment Pretoria, Johannesburg and Witwatersrand are showing growth with Potchefstoom also pointing to potential. Everitt advised to keep an eye out for Pietermaritzburg where numbers are expected to grow.

However, Everitt warned, investors need to carefully select property that needs little or no maintenance. Look for robust surfaces that are easy to replace and implement a breakage cost paid by the tenants.

Use December summer holiday to do maintenance in and around the property for most students will not use the accommodation then.

(This article is courtesy of IOL)

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Cape Town Voted Best World City

2008-12-23T23:33:00.000-08:00

Cape Town has been voted ‘Best World City’ in the 2008 Telegraph Awards. This spectacular destination was voted above major cities like San Francisco and Sydney to walk away with the honours. If that’s not enough South Africa also claimed a place in the top three in the ‘Best Non-European Country’ category.

From the 40 000 people that were used in the poll, 92% said that the credit crunch will have no effect on holiday destination choices. Among the top destination on earth were New Zealand, Australia, South Africa and Canada. Alongside Cape Town were San Francisco, Sydney and Vancouver in the top cities category.

Cape Town’s top tourist attractions include Table Mountain, the V&A Waterfront, Robben Island, the Cape Winelands and Kirstenbosch Botanical Gardens.

Cape Town was also recently voted one of ten cities in the world that are most likely to become a global sustainability centre by 2020.

The same awards saw Singapore Airlines, Virgin, Emirates and Qatar Airways walk away with the people’s favourite airlines.

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Auctioneer Timid About 2009

2008-12-23T00:06:00.000-08:00

This article is courtesy of Realestateweb (2009: Auctioneer gazes into his crystal ball – 22 December 2008)

Rael Levitt, CEO of the Alliance Group warns that global events will continue to have a huge impact on the distressed South African economy in 2009.

Levitt says that The Alliance Group, South Africa’s largest asset services and auction group, has experienced a turbulent 2008 with the property market going into free fall from the middle of the year. This started with a sharp increase in car repossessions and then house repossessions. Personal insolvencies followed which left Levitt’s company with large volumes of these distressed markets.

“By the end of the year we saw liquidations following and this December there have been more liquidations of companies than since the turbulent mid-1990s".

Levitt explained that what we are seeing know in South Africa is six months behind the USA, UK and Europe where distress is moving from the retail environment in business. Also following in the global trend is the property market, with a flood of residential stock hitting the market with both forced and non-forced sellers’ values dropping across the board.

Levitt said that by the end of this year, mortgage stress (less than two months in arrears) has grown to over 100 000 and severe mortgage stress (being four months in arrears) has also spiked to over 30 000 home owners. He added that for this to slow down, the Reserve Bank have to slash the interest rates by more than 4% at the start of 2009.

Commercial property, according to him has not been hit that hard even though the banks have tightened up on new finance criterion, which has dampened the demand. Sellers of commercial property prefer a “hold position” rather than discounting their prices. Levitt believes without a doubt that cost inflation will cause an upward pressure on prices and rentals. With rentals increasing as a result of supply constraints, plus lower interest rates, many opportunistic buyers will emerge.

Liquidations have increase sharply with the weakening rand impacting local businesses and both domestic and foreign investor sentiment. This can be seen in the large numbers of liquidations and business closures in November and December. Levitt warns that importers, motor trade, building suppliers and contractors can expect a rough 2009.

However, Levitt still believes that the 2010 Soccer World Cup will improve sentiment in certain sectors. He concluded by saying that those investors who understand the market cycles and who has access to finance, will be the ones who have a once in a decade opportunity to accumulate assets and businesses at fantastic values.

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The Year Ahead: What to Expect

2008-12-21T23:16:00.000-08:00

The information in this article is courtesy of Realestateweb (Fasten your seatbelts: it’s another rough property ride – 22 December 2009)

After a difficult year, the property market is set for another bumpy ride according to experts. Sure with the interest rate finally dropping a bit we might feel pessimistic but will this really make a difference in the year ahead.

There are some things we can take into consideration including that banks have tightened up on lending criteria to the point where home loan providers are rejecting about one in two buyers. At the moment there is no sign that this is going to change soon.

The amount of buyers has drastically falling due to harsher economic conditions. With less and less people considering buying or selling houses, estate agency will have a hard time keeping their heads above water.

Property prices have fallen and some are saying that it might not be the bottom yet, and while buyers are sitting on the sideline waiting for property prices to reach the bottom, agency are having a hard time surviving. These buyers are also waiting for expected interest rate drops, meaning that they might get a bigger home loan in 6 months’ time.

The unstable political scene will also have its effect on the property market in 2009. The 2009 elections in South Africa might bring some necessary relieve, but will also mean that buyers will sit on the sideline and wait before they enter the market. With our government yet to resolve the problems in Zimbabwe, we might also see more sellers that buyers. This is bad news because the property market has an excess stock as it is – particularly in the R2 million plus range.

If you are, however feeling optimistic about South Africa’s future there is not better time than now to invest. You are likely to pick up excellent bargains with great potential should things start looking up again.

Look for property in South Africa

Currency Trend Can Bail Out SA Market

2008-12-17T23:18:00.000-08:00

PropertyWire, a global property news service, reported that the real estate market in South Africa is experiencing the toughest conditions most people can remember. However, they do predict that the currency fluctuations could help recover the struggling market.

Samual Seeff, chairman of the Seeff property group, is known for selling the country’s most expensive property earlier this year. Seeff says that volumes are down and times are tough. He added that even the top end of the market is quietened down.

Like other agencies, Seeff is not expecting a good summer but is rather focusing on surviving the slump.

Berry Everitt, MD of Chas Everitt International, is more optimistic. He reckons that interest from foreign property investors could be a trend that can help the property market. He added that there is a “mood of optimism sweeping through the global market” in the wake of the US election outcome and is generating renewed interest in South African real estate.

Everitt’s prediction is that European buyers in particular would once again see the properties in South Africa as a good investment, and the weakness of the rand against their currencies will help this on. In addition, he said, the South African market is in good shape and likely to recover faster than other markets.

Everitt says that the foreign interest can already be seen in the “substantially higher” number of inquiries they have received from foreigners.

Everitt concluded by saying that these buyers are not necessarily interested in any property but rather more expensive, lifestyle properties.

Invest in property in South Africa

Pros and Cons of Owning Holiday Homes

2008-12-16T23:53:00.000-08:00

(Information in this article is courtesy of Realestateweb (Holiday homes: The pros and cons – 19 November 2007)

While on holiday this year, some might become so bedazzled by the local scenery that they might decide to buy property in a holiday destination. Real estate agents in these areas are already gearing up for, what might be a busy season for them.

If you look at the advantages of owning a holiday home, flat of apartment you’ll see that having an investment like a holiday home, it might earn you some income on the long run or even open the door for rental income.

Absa recently pointed out that a holiday homes, apartment or even vacant land can also serve as a collateral for other debt.

If you are buying with the financial help of a bank you have take in consideration that this might put a lot of strain on your income. If you want to use the property occasionally, you are going to have to rely on short-term tenants like holiday rentals. Expect to do most of the marketing for this yourself, seeing that there is a shortage of short-term rental agents in South Africa.

There is also the possibility of the interest rates rising, in which case you will have to pay more for your holiday haven. Another big expense might be cleaning and maintaining your property in between visitors’ stays.

Other disadvantages include higher maintenance cost because of the proximity to the coast, as well as the fact that sea or mountain views are not preserved and can impact your property’s value. In tough market conditions you might find it hard to sell you property.

There are, however, a lot of advantages to owning a holiday home; if you do your sums carefully and make wise decisions you will reap the rewards. If you are not planning to use the property often and not planning to rent it out, it might be smarter to invest in a different kind of property all together.

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Rate Cut: What Do the Experts Say

2008-12-11T23:15:00.000-08:00

This article is courtesy of Realestateweb (Tito’s Tonic: Too little, Too Late – 12 December 2008)

Yesterday South Africans heard that the repo rate was cut by half a percent. This announcement by Tito Mboweni is said to pave the way for lower interest rates from commercial banks and even further cuts next year. But the question on everyone’s lips is, is this enough. The cut will not make a major difference to individuals’ debt repayments and would not influence the property market anytime soon, according to analysts.

The repo rate – the key monetary policy interest rate – now stands at 11,5%, which will lower the prime mortgages rates offered by banks to 15%. Nedbank has already announced that they would be cutting the rate for their customers.

This is the first time the repo rate has been lowered in two-and-a half years. Since June 2006, interest rates have been climbing steadily and the extra 5% ramped up home loans repayments by more than 30%. The economy has taken a huge blow and many have lost their jobs and possessions because of this.

John Loos, property strategist for FNB’s home loans’ division said that the cut implies a decline in prime rate instalment repayment of about R185 on a R500 000 (20 years) and about R371 on a R1m bond (20years). Even though this is not much it is believed to be the start of a series of cuts that are expected to end about 3,5% lower - to about 12%.

Jacques Du Toit, senior property analyst with Absa Homeloans said: “Against the background of current and expected economic conditions, especially with regard to inflation, interest rates are forecast to be cut further during the course of 2009.

He added that the outlook for the residential property market towards the end of 2009 remains depressed. A noticeable improvement is expected in 2010.

According to Neil Gopal, CEO of the South African Property Owners’ Association we require more cuts to really see the effects. He added that it takes about 2 years for interest rates to take effect. This means the hikes of last year are still being felt now.

"I don't think consumer spending will improve in the short term and we should see some recovery in the retail sector in the second half of next year. We need more government spending on infrastructure projects to ensure jobs in the construction sector are maintained."

Brain Falconer, CEO of Colliers International Residential, is more positive about the cuts and Samual Seeff, chairman of Seeff Properties agrees but says that only a 3-4% cut would have a positive effect on the market. He added that the real estate market would continue to suffer if the banks aren’t willing to lend money more freely.

Dr Andrew Golding, CEO of Pam Golding Properties says that it will take a while for the rate cut to influence the market and hopes for a more substantial cut. Hershel Jawitz agrees and said that there are great buying opportunities out there and can’t be taken advantage of due to the banks’ strict lending criteria.

But property in South Africa

Fewer Tenants are Paying on Time

2008-12-10T23:50:00.000-08:00

The Times reports that there have been a significant drop in the number of rental tenants who are paying in full and on time. This is according to TNP, a registered credit bureau and developer of the industry’s first rental payment profile in South Africa.

TNP’s database shows that 54% of tenants were able to meet their rental commitments for the third quarter, compare to previous figures of 70%. These shocking numbers comes as a huge shock since the rental industry has seen a recent average rental drop of 2%.

According to Michelle Dickens, managing director of TNP, the 16% drop in on-time payments reflects the current economical situation and how it is affecting tenants.

Another shocking figure was released by the National Credit Regulator showing that there are 17.14 million active credit consumers, of whom 38.44% are in bad standing.

Dickens further added that the most worrying fact is that 12% of tenants are not able to meet their rental demand at all and are defaulting on their full rental payment. Dickens explained that it is important to remember that affordability is not measured by earnings alone but rather earning less expenses.

TNP’s database combines information and other sources to provide the most comprehensive behavioural profiles on tenants and prospective buyers in the property industry.

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SA Property: Market: What Lies Ahead

2008-12-09T22:26:00.000-08:00

The information in this article is courtesy of BetterBond (The road to recovery - December 2008)

With everyone’s eyes fixed on 2010 and the world cup, some may have forgotten about 2009. Many economists are predicting the tough market conditions will continue well into next year even though the first rate cut is expected in December 2008. Developing economies such as South Africa will continue to suffer the impact of the global recession, which means 2009 starts with local markets already on the back foot.

Deon Lessing, marketing director of Betterbond says: “Starting on the long road to recovery, 2009 will still be a tough year for consumers and those in the property industry. Economists predict consumer spending may be at its weakest point in the first half of next year. As interest rates begin to decline, sentiment should start to improve. But in short - a debt riddled society will still be the issue. Interest rates are expected to be cut by at least 300 basis points by the end of 2009, but it will take time to filter through to the market. The banks are still adhering to strict lending criteria, so obtaining mortgages will only be for those with a good payment profile, with a deposit and who can demonstrate affordability.”

According to Jacques du Toit, ABSA senior property analyst, the nominal house price growth is expected to be between 3% to 4% in the 2008-2009 period, while in real terms house prices are set to decline next year.

“The decline in house prices will bring about buying opportunities for investors looking to expand their buy-to-rent portfolio. There will be many property deals available to buyers who have a deposit and clean payment profile or enough money to buy a property with cash. With banks asking for higher deposits and only 50% of bond submissions approved, it will be people with money that will be in the driving seat in 2009. The global recession has also led to the opportunity for South African investors to buy property in countries like the UK, where housing prices have also dropped significantly,” says Lessing.

With continued tough economic conditions, where will bond originators be focusing their efforts? “Our goal next year will be to secure relationships with our partners, the estate agents and the banks. It will be important to acquire the maximum amount of business from agents by ensuring that we can obtain bonds for their clients. No deal is too big or too small. The only way this can be done is for us to be 100% aligned with the lending practises of the banks,” says Lessing.

He says it will be vital for property professionals to also get back to basics, as this is no time for frills. In the past, great market conditions made us complacent, which in turn meant is was more difficult to adapt to the changing market conditions during 2008. We now have our ducks in a row and are ready for 2009 and all the opportunities it will bring.

“2009 is the year to keep it simple and where possible keep expenses down by cutting short-term debt. Property is a medium to long-term investment and if consumers can afford to take advantage of the market downturn, now would be a great time to do it,” Lessing concludes.

Browse through property for rent in South Africa

Experts Predict Rise in House Prices

2008-12-08T23:13:00.000-08:00

(The information in this article is courtesy of PropertyWire (South African Property Market Might Be Reaching Temporary Bottom – 8 December 2008)

At the moment property sales in South Africa have ground to a halt but the good news is that experts predict that when the market starts to recover, prices could rise to more than 50% in 3 years.

Bargain prices are to be expected over the next 3 months and some suggest that there may not be a better time to buy than now. Chas Everitt International’s spokesperson, Barry Everitt suggests that you make money when you buy property, not when you sell. He added that there is no better time to buy than the present, especially with the forecast of property prices rising by 50 to 60 percent in 3 years.

Rising sales activity since August indicates that there is an increasing demand, which will intensify when interest rates start to fall next year. According to Everitt this will lead to stock levels falling and prices will start to rise. At this point there will be a window of opportunity to negotiate the best deals.

Chas Everitt International’s report also indicates that the best buys are likely to be in the medium-price, medium-size sector of the market where price growth is currently at its lowest ebb.

Everitt concluded by saying that these homes are likely to experience the highest level of demand when the economy turns and many middle-class families who are currently making do in rented accommodation of smaller homes can once again qualify for home loans and start looking for homes of their own or upgrades.

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House Prices are Going Down - Absa

2008-12-07T22:59:00.000-08:00

The information in this article is courtesy of Realestateweb (It’s official: House prices are going backwards – 8 December 2008)

Absa – who has been monitoring house prices since the 1960’s – has spilled the beans by saying that the average house in now worth less than a month ago. They released the shocking figures on Friday, which states that the average house in South Africa cost about R963 500 in November. This is about 0.1% less than in October.

Another figure shows that real house prices, which take into account the effect inflation has on purchasing power, have dropped by more than 10% year-on-year.

More figures released by Absa indicates that small houses (below 141m²) declined by 0.3%; middle segment houses (141-220 m²) edged up slightly to R670 300 and large house prices ground to a halt and now stand at an average of R 1 381 100.

According to Absa’s senior property analyst, John Loos, the outlook for the property market remains depressed for the first half of 2009. He added that this year houses are expected to have increased in value by 4% overall, but the forecast for next year is for houses to drop on average by at least 3%.

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Building Contracts: What You Should Know

2008-12-04T23:38:00.000-08:00

The information in this article is courtesy of Realestateweb (Bad Builders: What to do? – 5 December 2008)

According to Luthando Vutula, managing executive of Absa Home Loans, it is absolutely essential that you check all references before you sign a contract with any builder, as banks do not protect clients from unprincipled builders. These builders often rip off their clients by not completing houses or by building poor quality and sub-standard houses.

Vutula advises that clients should ensure that they fully understand the content of the building contract before employing the services of builders. If you, as the client, are not completely satisfied with the standard of quality of the work, you should speak to directly to the builder of developer. If you can’t reach an agreement with the builder you can contact you bank and instruct them to make no further payment on the building until the work has been done to your satisfaction.

Vutula explained that the bank is not party to the building contract and one should contact the National Home Builders Regulatory Council (NHBRC) if you encounter any disputes between you and the builder. Although the bank cannot recommend builders to its clients, the legislation stipulates that all builders involved with building projects that are subject to a mortgage loan should be registered with the NHBRC. You can also get information on registered builders from the NHBRC.

Vutula further advised that clients should obtain legal advice for clarity on the terms and conditions of the contract to avoid any unpleasantness. He added that when a client applies for a loan on building works on their property, the bank appoints a valuer who does checks on the construction or building site to ensure work is being carried out in accordance with the minimum building requirements and plans submitted to the bank.

According to Vutula the clients has the right to withhold payment from the builder but should first familiarise themselves with the contract and where they stand regarding withholding funds.

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Top Agency Closes Two Offices

2008-12-03T23:52:00.000-08:00

The information in this article is courtesy of Realestateweb (Jawitz retreats in Cape Town – 3 December 2008)

The tough market has yet again force an agency to close it doors and this time it’s one of the top estate agency brands. Jawitz Properties, which is well established in Gauteng, recently closed two of its offices in Cape Town – Jawitz Hout Bay and Goodwood.

According to the CEO, Herschel Jawitz, this was a tough business decision and he added that even though these offices closed, the agency still has a strong presence in Milnerton and surroundings. Jawitz Properties also has offices in Blouberg, Sea Point, Pinelands, the City Bowl and Hermanus.

Jawitz said that the Hout Bay office was closed because of sales date, which showed that the area averaged around 10 to 12 sales a month. Also, the volume of sales is down by about 50% with April, May and June down around 70% year-on-year. This means that there were about 60-70 agents fighting for around 10 sales in this suburb. This has caused the number of agents to fall dramatically – from an estimated 150 estate agents.

In Goodwood, a lower-income area, buyers have been under a lot of pressure. At a price of R600 000 to R700 000 you have to pay 5% deposit (around R50 000) plus costs.

Jawitz said that no agencies have been spared and the tough times have become even worse with the pie shrinking dramatically. However, he said, his company still has plans to expand in the Western Cape and elsewhere. He is positive about the future and stressed that the competition in the political arena, lower inflation and an interest rate cut could turn things around.

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Paying your dues - Property Tax

2008-12-01T23:53:00.000-08:00

The information in this article is courtesy of BetterBond

Once again it is that time of year when everyone is frantically filing their tax returns and for most this is fairly easy process. But what are the tax implications of selling or owning a property?

Deon Lessing, marketing director of Bettterbond says: “Many sellers may be worried about paying a Capital Gains Tax, however there is an exclusion of a gain of up to R1 500 000 on a primary residence. This means that any home sold for a capital profit of that amount or less will not be subject to a Capital Gains Tax.”

So how is a primary residence defined? A primary residence is one used mainly for domestic purposes that you both own in your personal capacity and live in on a permanent basis. Inclusive of the land the property is situated on an unconsolidated adjacent land, the residence must not exceed two hectares.

“If the property is in the name of a company, close corporation or trust, the exclusion will not apply as the owner is then not classified as a natural person and the property will not be used as a primary residence. The seller would have to pay the capital gains tax upon registration of the property into the purchaser’s name,” adds Lessing.

Johan van Heerden of Dykes van Heerden Inc, advises: “It is of utmost importance for the purchaser to establish before the agreement is entered into, whether the seller is registered for VAT or not.”

With regards to purchasing a residential property, as a general rule in South Africa, a purchaser will pay transfer duty on a sliding scale to the Receiver of Revenue. However, should the seller be registered for VAT, the purchase price will be inclusive of VAT, unless specifically excluded in the contract. If the property that is being purchased is of a commercial or business nature and purchaser is registered for VAT, then the purchaser will be able to claim the VAT back from the Receiver of Revenue after registration. However, sales of residential immovable property do not attract VAT, due to the fact that the sellers are not registered for VAT. This situation is of course different should a buyer purchase a property from a developer who is registered for VAT, and as such, no transfer duty is payable as the seller is registered for VAT.

With current market conditions and increase in demand for rental property, many investors are buying property to let out. If a property is purchased as a buy-to-rent investment, the tax levied for the letting of residential property falls under the normal ambits of income tax.

A proposal has been included in the new Revenue Laws Amendment bill, issued 1 August 2008, which calls to revamp the allowance applied to taxpayers renting out residential housing units. The proposal relates to housing units let out by a taxpayer, or that are occupied by the full-time employees of the taxpayer. Currently there is a write off of 12% for the first year and then a write off of 2% per year for the next 44 years. The proposal aims to change this to a standard rate of 5% over a 20 year period.

If a residential property has been bought for business use, there is no difference to how the property is taxed except if the property is zoned as a business. If this is the case, the Property Rates Bill could effect how the municipality determines the amount of tax charged. It is best to phone the municipality for rates being charged in the area you wish to purchase.

SARS has made tax returns far simpler to fill out and submit. However, if there are areas you are unsure of it is best to use a tax consultant or contact an attorney. Visit www.dykesvanheerden.co.za for more information on property tax and transfers.

***The information contained in this press release provides general guidance. It is not intended to constitute substantive information and cannot replace the specific advice which should be sought from an appropriate professional advisor in relation to the actual facts of a matter, before taking any particular course of action.

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Huge Rental Demand in Camps Bay, Clifton and Bakoven

2008-11-26T23:44:00.000-08:00

The information in this article is courtesy of The Property Magazine (Foreigners snapping up rentals in Camps Bay, Clifton and Bakoven – November 2008)

According to The Property Magazine there is a huge demand for quality long-term rental properties in Camps Bay, Clifton and Bakoven. According to Charles Bloem, specialist Seeff rental agent for these 3 areas, 80% of the properties on his books were rented by foreigners.

Bloem added that most of these foreigners were from Europe but among them were also people from the USA, Australia and Brazil. The large group of renters can be divided into two groups; employees of large companies that are relocating to South Africa for 2-3 years and families taking extended holidays of about 12 months while their children attend school in Camps Bay of Cape Town.

These tenants usually require furnished or unfurnished family homes with 3-4 bedrooms, swimming pool, garden and secure parking and are willing to pay around R20 000 – R30 000 per month.

Bloem continued to say that there is also a rental demand from people living in other regions in South Africa, mainly Gauteng, who are relocating but choosing to rent for 6-12 months before buying their own property. This is mainly because they need time to sell their property and because they want to take time to find the ideal property.

§ In other news, Realestateweb reported that one Cape Town agent has made two record-breaking sales by selling 2 Camps Bay properties. Both properties were scooped up by Gauteng businessmen.

The first home was sold for R21m and the second R16,5m.

Rent property in South Africa

Why You Need an Estate Agent

2008-11-25T23:44:00.000-08:00

The information in this article is courtesy of Realestateweb (Big reasons not to sell your own home – 26 November 2008)

Private property sales are becoming more and more popular as homeowners try to save on commissions. According to Lanice Steward, managing director of Anne Porter Knight Frank estate agency, her experience in the industry has shown that these private sales can be disastrous.

Steward pointed out that there is a misperception of the role of the estate agent in some cases. This stems from ignorance of what the agent does and a lack of appreciation of what he or she can bring to the negotiation and sales process. This, according to Stewart, is somewhat surprising seeing that people don’t try to diagnose their own ailments, and they certainly don’t try to service their own cars, buy yet they think that they are qualified to market and sell their biggest assets.

The biggest mistake made by DIY home sellers is often made while investigating prices in their region. Show houses are almost always overpriced and when sellers use that price as a guideline they often overprice (or sometimes under-price) their own property.

DIY sellers often find that the advertising cost is higher than they bargain for and that possible buyers pray on their inexperience and downgrade their price by pointing out drawbacks and defects. When a serious buyer do come around the sellers often lack the legal and negotiating skills to get a good deal.

When using a trained agent these issues are often totally excluded from the selling process; the seller benefits from the agency’s large-volume advertising and the agent will have a potential buyers list, which is a good start. A professional agent will recognise the pitfalls and traps to avoid in the all-important negotiation process and all other deed related issues would be handled with precision.

Steward thinks it is important for all homeowners to note that, although an agent’s commissions might sometimes be high, the reality is that paying an agent will almost always get you a sooner and better deal.

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Choosing and Using a Building Contractor

2008-11-24T04:56:00.000-08:00

(This article is courtesy of Paddock Press - an ad-hoc free digital newsletter published to educate and update the sectional title community.

Building maintenance is an essential reality for anyone living in a sectional title scheme. All buildings suffer wear and tear due to the effects of wind, sun, rain and the activities of their occupants. Even buildings that have been built to the highest standard require needs regular maintenance work in order to maintain the building standard required by the owners and the Sectional Titles Act 95 of 1986 (“the Act”).

Section 37(1)(j) of the Act obliges the Body Corporate to properly maintain the common property, and keep it in a state of good and serviceable repair.

There are a couple of things you should keep in mind when choosing a good contractor for the job: The trustees, as the elected representatives of the body corporate, are the persons empowered in terms of the Act and the prescribed rules to choose a maintenance contractor for the scheme on the body corporate’s behalf. It is possible that the owners many give the trustees a specific direction at a general meeting, but more usually a majority vote or the trustees will determine which contractor is chosen. But the rules do exclude a trustees from voting in certain circumstances – Prescribed Management Rule 23 disqualifies a trustee from voting in respect of any contract or proposed contract in which he/she has a personal interest. This doesn’t mean that a contractor in which a trustee has a personal interest cannot be used to do the scheme’s maintenance; it simply means the trustee with the personal interest is excluded when it comes down to the vote.

Ensure that a least 3 written quotes, based on the same specification, are obtained for the job. It may be sensible to get more quotes, but getting at least 3 will ensure that the trustees have a good basis for comparison.

Once the trustees have an acceptable quote, they should ask the prospective contractor for references, ranging from work done when they started their business to projects they have just completed or are still working on.

With smaller contractors the trustees should try to obtain some indication of financial stability, perhaps in the form of a reference from a bank manager. Contractors’ financial situations can change very quickly and financial difficulties will almost certainly impact negatively on the level of service the scheme receives.

The trustees should try to obtain as much information as possible. It is not good enough if the contractor is only prepared to give the trustees a cell phone number. If possible, the trustees should go and visit the contractor’s premises to see where it is operating and how professional it appears. The bottom line – you are about to spend all owners’ money, so try to get as much information about the proposed contractor as possible.

Once the trustees have decided on a contractor, they should insist on a sighed contract. This contract should be very specific:

1. Explaining the detail what the job entails, no detail is too small
2. Tool and material storage, ablution facilities, rubble removal

3. Commencement and completion dates, daily work hours

4. Penalties if terms and conditions are not met

5. Breakdown of how money will be paid

The proposed contract should be tabled at a trustee meeting and two trustees should be specifically authorised to sign it as well as to authorise payments. If there are any clauses in the contract that the trustees don’t agree with they should put a line through them and all persons signing the contract must initial these and any other alterations.

It is advisable to stick as close as possible to the work quoted for. But during the course of the maintenance work, the trustees may find they need to request that the contractor complete extra tasks. Always ensure that these extras are quoted for and put in writing, as this will avoid conflict down the line.

In most cases, deposits are required. Although there is not a hard and fast rule, the following is a guideline.

1. 20% of the full contract price on the signing of the contract

2. 30% on delivery of material to the site

3. 30% can be used as “progress payment”, and

4. 20% should only be paid after completion and when the trustees are completely satisfied with the work done

5. In larger jobs that involve building from the ground up, a retention fund for defective work should be kept for at least 6 month after the job has been completed, this amount will normally be 10% of all payments made.

Maintenance contractors should ideally be registered with some form of regulatory body, these boards serve to regulate their respective industries and usually offer some form of compensation for defective work done by its members. For example, if your scheme is having electrical work done the trustees should ensure that the contractor is a member of the Electrical Contractors Association of SA. The Association regulates the electrical industry and guarantees to rectify defective work or materials on contracts by its members of up to R15 000.

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Commission Cuts to Stay in Bussiness

2008-11-20T23:24:00.000-08:00

The information in this article is courtesy or Realestateweb (Property sales, rentals. Will you pay less commission? - 21 November 2008)

Realestateweb reports that more and more properties are spending more than 20 weeks on the market. This has urged some agents to offer discounts on commissions charged for selling homes – some of them dropping their commissions to below 5%.

One of these agents is Andre Le Sueur, an estate agent for Property100 Pretoria. He says that lowering his commission has helped him sell more property. He feels that charging 7,5% commission might cause you not to sell anything at all. However, says Le Sueur, some sellers still ask for discount and sometimes he even gives them 1% on below 5% commission.

Jerome Khambule of Khambule Estates in Durban said that rental commission of less than 5% is a huge blow to income as there are many bills to pay. According to him his agency charges 7,5% and he thinks that less than 5% is not good for business. Fine and Country’s CEO shares Khambule’s views on this.

“When agencies start operating under the rate of 5-6% commission, they are moving into the danger zone. Currently with so many agencies closing, the public will have no choice but to appreciate a higher commission rate for an all-inclusive quality service.”

She added that unrealistic cuts just to get business will not benefit the client for there will be little guarantee that funds for marketing will be available. She feels that fees should be cut when markets are stronger and more buyers are present.
“It is common in South Africa for home sellers to negotiate the estate agent's fee, however in most cases it is simply just accepting that the fee is less but the activity and marketing are the same.”

Erasmus warned that when agents become to desperate and cut commission below 3%, the activity will also be cut to zero in some cases.

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Property Boss Optimistic About the Future

2008-11-20T00:22:00.000-08:00

The information in the article is courtesy of Realestateweb (Six reasons to be cheerful about 2009 – Property boss – 20 November 2009)

Jan Le Roux, CEO of Leapfrog Property Group says that he sees more positives than negatives for 2009. He added that political leaders should stop looking after themselves and rather focus on the country’s people – especially in a time where economic indicators are showing that the economic slump may have bottomed out.

Some of the positives, according to Le Roux are Finance Minister, Trevor Manuel’s prediction that growth should increase to 4,3% n 2010 and his bid to spend R600bn on infrastructure. On top of that the promising 2010 is looming.

The best news is the fact that the CPIX inflation has slowed to 13% from 13,2%. On top of this we might also be in for a first rate cut of 50 basis points (half a percent) in February.

Among the other positives are WesBank’s vehicle sales’ confidence indicator showing that an increase of 4,3% can be expected for 2010.

Although Le Roux warns that it might not be time to bring out the fireworks yet, the bottom has been reached and things can only get better now. He also assured property investors that property is still a sound investment; hence you see it as a long-term plan.

“People still get married and divorced, have kids, kids leave home, get promotion, move between cities, etc in all markets. Sellers who sell in high markets have to buy in high markets. Sellers, who wait until the low market improves, may sell at a higher market but will buy at a higher market, whereas if they sell in a low market they buy in a low market.”

Le Roux said that, unless politicians stop playing the man instead of the ball, South Africa might be plunged into a deeper and prolonged recession, as the markets are very sensitive to political situations.

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Why are Suburbanites Moving Back to the Townships?

2008-11-18T23:25:00.000-08:00

The information in the article is courtesy of Realestateweb ("We're moving back to the townships" - 19 November 2008)

Many property buyers living in the suburbs have now decided to pack up and move back to the townships. The reason might be that suburban homes have become unaffordable, while the market in the townships is booming. The FNB Township Barometer is also showing that the township market is slowing down as a result of general economic growth, inflation and interest rates.

Property strategist, John Loos says that the townships are in good shape, despite the slow market, and the shortage of stock is driving this boom. The statistics are showing that Durban’s has the highest shortage of stock of 68%, Cape Town 38% and Johannesburg 31%. This has pushed the property prices up, as supply cannot meet demand.

Further statistics show that 31% of buyers in Gauteng are believed to be from the suburbs, 26% in Cape Town and 24% in Durban. In Soweto alone there are an estimated 38% of buyers from the suburbs. Loos says that this might be due to infrastructure upgrades and retail developments – causing the area to be more attractive to buyer with purchasing power.

Lawrence Molepo is as an estate agent for Gilbert Estates in Protea, Soweto. According to him the booming property market can be due to the shortage of stock but also due to upgraded infrastructure.

Molepo explain that since the Maponya Mall has open the house prices around the mall have gone up substantially. A four-bedroom house cost less that R100 000 before the opening of the mall and is now selling for R300 000.

Molepo predicts that the positive growth in the residential property market might encourage developers to embark on large-scale commercial properties in Soweto.

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2009: A Time to Buy

2008-11-17T00:26:00.000-08:00

The information in the article is courtesy of Realestateweb (What's in store for property - 2009, 17 November 2008)

Lew Greffen, head of Lew Greffen Sotheby’s, said that this is a great time to buy property in South Africa. This comes after his controversial prediction earlier this year that the property prices will continue falling and that the market has entered a recession.

His views regarding the South African property market in 2009 are plain and simple: Buy now if you can get the money. The agents in the market, according to Greffen, should just hang in there and ride out this “typical cycle” that might last for around 2-3 years. He suggested that there are among the agents, those who might not make it.

Greffen also said that this violent market decline is partially because the market came of such a high, but he explained that there are some positives like the fact that the small amount of stock in the market might stabilise the prices.

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Rental Deposits: Do’s and Don’ts

2008-11-13T22:57:00.001-08:00

The information in the article is courtesy of Realestateweb, (“Tenant’s rental deposit: what you need to know”, 14 November 2008)

Realestateweb’s columist, Mike Spencer – property valuer, estate agent and sectional title expert – explains some factors regarding a tenant’s deposit.

Firstly it is good to know that the purpose of a deposit is to cover unpaid rental, damages to the property, inspection fees and unpaid bills.

According to Spencer, when you use a management agent to look after your property, they usually keep the tenant’s deposit in their account. As a landlord, you do not have to pay interest on that deposit nor do you have to open a separate bank account, although larger companies might run a special bank account for individual deposits and pay interest, but this is unusual.

One thing to keep in mind, Spencer said, is that the deposit is kept up to date so that if the rent increases the deposit should be increased to keep it up to the full level required.

As a landlord you are allowed to ask more than a month’s rent as a deposit. Some agencies ask one and a half or 2 months’ rent. When you have to use the deposit to cover cost, remember to keep all receipts.

A question that is often asked is when you should pay back the deposit if there are no damages. Spencer says that the deposit needs to be paid back within 7 days of the evacuation of the property should there be no damages. If there are damages it should be repaid within 14 days, but this might sometimes be delayed if you need to get contractors to fix the damages.

Remember to always get proof that all water and electricity bills have been settled before you pay back the deposit. When water and electricity is paid by the body corporate stick to the rule “no final account, no deposit”.

Don’t make the mistake of letting your tenants pay off the deposit over a period of time. If a tenant can’t afford the deposit they are probably going to struggle to pay the rent, too.

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World Cup to Transform SA Property Market

2008-11-12T22:54:00.000-08:00

An international property website reported yesterday that the Fifa 2010 World Cup is expected to inject as much as £ 1.5 billion (around R23.4 billion) into South Africa, as tourists and visitors from all over the world fill up the stadiums, restaurant and hotels in the country. This, and the current expansion of the local infrastructure will ensure that the South African property market will become a sought after investment wonderland.

According to Lloyd Cornwall, Managing Director of Pin High Property in South Africa, our country has already made a name for itself in the global property market. He added that property here is still undervalued but that continued investment in the lead up to the World Cup will balance the market once again.

Cornwall encourage potential buyer to invest now, before the market reaches a new level. He added that both long and short-term investors can expect to see tremendous results.

On a different note, Donald Trump has decided to expand his property portfolio to South Africa. In partnership with local businessman, Neill Bernstein, they will work on a variety of properties, including golf estate, hotel and residential development.

Other areas that host Trump’s developments are Dubai, Panama, Asia.

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The Big Five Challenges Facing the Market

2008-11-11T00:11:00.000-08:00

The information in this article is courtesy of Real Estate Web (Samuel Seeff's Crystal Ball - 10 November 2008)

A resilient property market, as well as the local economy has proven that we can expect a come back – even as soon as next year this time. According to Samual Seeff, chairman of Seeff Properties there are in fact 5 big challenges that the South African market will have to face in order to make a recovery:

Bank has substantially tighten there lending criteria, higher deposits has been demanded, not to mention the effect that the stringent demands of the New Credit Act have had on the property market.

As a result of this, one out of every two bonds applications has been rejected, which has economist predicting a further slowdown in mortgage rates.

Property prices have dropped significantly due to a weakening demand and high interest rates. Seeff urges those who can secure bonds to buy property now. The predictions by economist here are that the prices will pick up within a year, and further escalate by 2010.

High interest rates is a big challenge, although economist suggest that relieve is on its way. However, the current turmoil in the international market has had a negative effect on the Rand and an unexpected drop in the producer price index, maintains to be a hefty concern.

Therefore, The Reserve Bank won’t cut interest rate just yet, but it can be expected after the recalculation of inflation figures to be introduced next year.

Poor investor confidence, caused by the current turbulence in the international market, has certainly had an effect on the property market. The good news is that exchange rates have taken some strain off the market.

Negative sentiment along with banks tightening up their lending is causing poor consumer confidence. Among other things that are also keeping buyers off the market are bond repayments increasing by 40% over the past 2 years, and food prices continuing to rise.

But relief is in sight with drops in the oil price and slowing inflation, which also indicates that the market is likely to recover in the last quarter of next year.

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Absa Predicts Bleak Future

2008-11-10T00:24:00.000-08:00

Another bank warns that consumers are in for an uphill battle. This time Absa states that the property market is moving into negative territory after statistics were released showing that price growth is at its slowest pace in 15 year. This situation comes after shocking interest rates and inflation caused consumers to tighten the belt.

Absa said that nominal house prices advanced at an annual rate of 1,2% last month – the slowest since January 1993 - after gaining a revised 1,7% in September. This bought the average house price to R696 100. Last month’s statistics also showed that the average nominal price of a small house is about R687 100, with the average price for large houses showed an average price of R1,394m.

Next year’s nominal house price growth is expected to be even lower and real prices were set to decline next year for a second successive year, said Jacques Du Toit, senior property analyst at Absa Home Loans.

“In view of current and expected economic conditions, the outlook for the housing market towards the end of 2008 and into 2009 is bleak.”

The information in this article is courtesy of Business Day (“Local property market outlook bleak” – 7 November 2008)

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Large Demand for Low-Cost Property

2008-11-07T00:47:00.000-08:00

The information in the article is courtesy of Propety24 (Low coast demand hard to meet – 6 November 2008)

Bill Rawson, chairman of Rawson Properties says that 80% of residential housing is now aimed at the sub-500k market and most of the remaining 20% is demand for homes in the 500k to R1m range. Rawson added that this can be seen all over the country and is largely due to tighter credit restrictions and high interest rates.

According to Rawson they would like to do more development in these sectors but the high cost of land are making it non-viable. Rawson went on to say that the value of housing has again been proved in the current financial difficulties and that it looks like the world economies will take some time to sort out their debt.

"However, in these difficult conditions South African housing continues to be bought and sold at the levels that pertained in 2006. Even if we dropped to 2004 levels, as seems just possible, the truth remains that housing has been able to ride out the current bumpy patch far better than most asset classes."

Another positive, Rawson said, is the recent auctioned property that achieved higher than expected prices – a sign that investors have restored their faith in the value of property. The new middle class is also tending to upgrade their homes, by either improvement of moving to a different area. This group of homeowners are aware of the value of property and know what they want from their investment – which is usually selling at market price or above.

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Real Estate Clock Predicts Rebound in 2010

2008-11-05T23:40:00.000-08:00

The information in the article is courtesy of Property24 (“Residential Market to Rebound Then”, 6 November 2008)

Real estate group, Colliers International (COL), indicated that the South African residential property market will rebound by 2010. This prediction is based on the real estate clock, which was developed in 1933 and demonstrates the cycles and current state of the market.

Sanett Uys, director of Colliers International in South Africa, explain that the property market goes through cycles and follows patterns. This cycle starts with a boom period, moves on to contraction, recession and eventually makes it way through to recovery, expansion, increased funding availability, and back to the boom period. This takes around 7 to 9 years, explain Uys, and each county and city has its own cycle.

She continued to say that while the new mortgage loan granted figures continue to decline, the demand for rental properties are up. She added that the increased cost of property ownership makes renting an even more attractive option.

It has also been noted that property is still a sound option considering certain factors like location. It is also important to see your investment as a long-term one and to understand the external factors that influence the market, among them society, legislation, the environment and the economy, not to mention inflation and interest rates.

Uys suggested that even if a slowdown in residential building completions for 2008/09 is expected, investors should ride out the wave and focus on capital appreciation in 2010.

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Inflation Figures Point to Interest Rate Cuts

2008-11-05T02:04:00.000-08:00

This article is courtesy of RealEstateWeb (“New inflation figures pave way for interest rate cuts” – 30 October 2008)

The latest inflation figures will give the nation hope that interest rates will drop in 2009. This comes after inflation levels left the residential property price growth and sales volumes in a sad state.

According to Cadiz African Harvest Asset Management, the latest Statistics SA producer price figures, are paving the way for a decline in rates form early 2009. He added that September’s figures was significantly lower than market watcher were expecting; producer inflation fell to 16,0% from 19,1% in August while the expected rate was 18,3%.

Hardien stated that the key inflation drivers at the producer level remain food, oil and other commodity prices. These groups of prices have turned slightly while dollar commodity prices have turned decisively. While this has been partially negated by rand weakness, the extent of the dollar declines have tended to overwhelm the rand’s moves.

The bottom line, according to Hardien, is that while significant upside risks to inflation remain, they are likely to be dwarfed by strong cyclical factors over the near-term – resulting in inflation continuing to decline through 2009.

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Weakening Rand Attracts Foreign Buyers

2008-11-04T06:07:00.001-08:00

Property Wire, an international property news service, reported that foreign property investors are more and more interested in buying property in South Africa because of the weakening of the Rand and the stable growth of rates.

Europeans buyers are among the ones that are looking to buy property in the Western Cape, along the Garden Route and close to venues that will host the 2010 World Cup Soccer. Also contributing to the increasing interest is the favourable exchange rate between the Rand and the Euro.

Real estate companies like Sotheby’s International Realty in South Africa and Pam Golding Properties report that they have already detected an increase in enquiries from international buyers. It is assumed that it is a direct result of the depreciating Rand.

Other say that is still too early to tell what the real impact on foreign buyers is going to be, because of the turmoil in the world financial markets.

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Mortgage Figures Signalling Tough Times

2008-11-03T01:26:00.000-08:00

This article is courtesy of RealEstateWeb ("Ouch! More bad mortgage figures point to scary property scenario” – 29 October 2008)

FNB released its figures for outstanding mortgages for September and warned that things are not looking good. According to them we should not expect the residential property market to recover before 2010 and that commercial property is doing even worse.

A graph showing mortgage growth declining steadily since 2006 – around the time when interest rates started rising - highlighted the weakening trend in the residential sector. John Loos also pointed out that year-on-year growth decline from 17,6% in August to 16,6% in September, and the bank believes that this is just a start; figures can drop to 0% which suggest that the tough times are far from over.

Demand for residential property is expected to pick up towards mid-2009, Loos said, but this is only expected to be seen in the outstanding mortgage numbers in 2010.

Loos also said that commercial mortgages have been declining since a peak in the late-2006. This means that this sector has been negatively affected by the rising interest rates and the deteriorating economic prospects.

FNB warned that numbers will continue to decline because the outstanding mortgages has yet to fully reflect the sharp decline in new mortgage loans granted, especially residential property.

§ Good news is that the website, PropertyOverseas, has suggested to it’s users that property in South Africa is an “attractive proposition” with the Rand giving them good value for money.

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Is the Slow Property Market Bottoming Out?

2008-10-31T00:04:00.000-07:00

Things are starting to look up for the South African Property Market as a number of real estate agents reported an increase in activity, suggesting that the slow market is bottoming out.

High interest rates and banks continuing to tighten their lending criteria are making others wonder if it’s time to celebrate yet. One of these agents is Mike Bester, CEO of Realty 1 International Property Group.

According to Bester it is not clear why some are so enthusiastic. High interest rates are still making it hard for some to access home finance and many buyers simply do not have the needed deposit to qualify for a mortgage. This, he cautioned, means that the market is unlikely to turn yet.

Bester advised investors to not expect a miracle upturn, even after a drop in inflation expected in the coming months. Hold on to your property or enter the market, Bester said, but until then we must wait for real evidence before we can be sure that the market is recovering.

The main obstacle that potential buyers need to overcome is getting finance. Following in Absa’s footsteps, Standard Bank is now demanding much larger deposits and introduced tough new lending criteria, while FNB is re-assessing its home loan criteria.

Banks are being stricter because of higher interest rates and lower capital growth on properties, according to Donnie Claassen of Quantro Garden Route. People who are hoping to buy real estate with the help of the bank must ensure they have a clean credit record. First time buyers are definitely the ones that are affected more because they tend not to have deposits.

Other lenders, according to Bill Rawson – chairman of Rawson Property Group, are sneaking in added costs like big penalties on mortgage bondholders who fail to give a full three months’ notice of their intention to terminate a bond.

The information in this article is courtesy of PropertyWire (Chink of light for South African property market not helped by lending crackdown” – 30 October 2008)

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Guidelines For Choosing Sectional Title Managing Agents

2008-10-30T00:55:00.000-07:00

Les Reynard reports that body corporate trustees, according to management rule 46(1) under the Sectional Titles Act, are responsible for appointing managing agents. This appointment must be in writing, should be signed by at least two trustees and should be for an initial year and then be renewed each year. Terminating this contract would involve the trustees giving notice to the existing agent before signing with a new agent – a process that will take about two months.

The time where trustees casually phoned around getting prices and appointing an agent manager on these grounds are over, because the cheapest quote is seldom the best one. A management agent is responsible for your complex and inherent for millions of rands; therefore a well-informed decision needs to be made. Here are some factors to consider before you employ a managing agent:

§ All managing agents must be registered estate agents. Obtain proof by asking candidates for a copy of their Fidelity Fund Certificate issued by the Estate Agency Affairs Board. This gives the body corporate cover by the Fidelity Fund operated by the Estate Agency Affairs board for loss arising form theft by the managing agent.

§ Make sure that the candidate is a member of the National Association of Managing Agents of South Africa (NAMASA). If so, is the candidate willing to agree to be bound by the rules of NAMASA.

§ Check the candidate’s reputation by finding out how long he/she has been in business. The experience that an agent brings to the table means a lot.

§ Choose a company where, at least the principal has a Certificate in Sectional Titles Scheme Management from the University of Cape Town.

§ If you choose not to go with the giants in the industry, make sure that the company you choose is personally run by its owner. In most cases these companies offer a better service than a company run by an employee.

§ Ask candidates to explain Management Rule 33 (which deals with the authorities needed for luxurious and non-luxurious improvements to the common property) to see if they have the necessary knowledge.

§ Always ask for references from at least ten existing and satisfied bodies corporate. Look for the chairman’s name, phone number and the name and addresses of each complex.

§ Make sure you understand what kind of report you will be getting regarding outstanding levies and all other additional information that you might need.

§ Part of the agent’s usual duties is to attend trustee and body corporate meetings. Ensure that your candidate is comfortable with speaking in public and that he/she displays the necessary confidence and knowledge.

§ Visit a candidate’s working place to see whether he/she is organised or overworked. Also find out who will take over the duties should he/she be sick or on holiday.

(The information in this article is courtesy of Paddocks Press Newsletter October 2008)

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Avoid Tenants Running a Business from your Premises

2008-10-29T00:00:00.000-07:00

The information in the is article is with courtesy of Property24 (“When tenant run business from home” – 27 October 2008)

It is vital for landlords to make sure that tenants are well aware of what they can and cannot do with regards to running a business from home.

Property24 asked Brett Nicholson of Shepstone & Wylie Attorneys to indicate the problems that can arise for landlords when their property is being used to run a business.

Nicholson explain that the destruction and potential damage to your property as well as the possibility of accidents happening is only the start. Along with that, there is also the chance of theft and undesirable visitors entering your premises. Nicholson added to that saying neighbours might complain, leaving you to sort out the problems.

Nicholson’s advice to landlords is to ensure that there is a clause in their lease agreement that states that the premises may only be used for private residential property and no other purpose whatsoever. It is also wise to add that no business of any sort may be carried out from the leased property without the prior written consent of the owner. This will ensure that, as a landlord, you will be able to cancel that agreement by written notice should the tenant not comply.

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Agency Boss Lashes Out

2008-10-28T02:49:00.000-07:00

The information in the article is with the courtesy of RealEstateWeb and Tony Clarke (“Estate agency boss lashes out at stock brokers, financial intermediaries” – 27 October 2008.)

Tony Clark, Managing Director of Rawson Properties, said yesterday that he has become tired of the negative merchants whose advice it is to “hold back and wait and see”, while actually they are missing out big time. He added that financial services are usually the ones who try to flog shares and financial packages on the ground that these are now greatly discounted.

Clarke is convinced that the wait-and-see approach results in consumers losing out on the best deals, and in the process they are paying 20%-40% more than they could have. He also added that in his view, the right time to buy is when others are selling; indicating that the economic cycle is at its lowest point. Even Warren Buffett agrees that it is wise to buy when everyone else is scared and to be scared when everyone else is buying.

According to Clarke the property market is now either already on an upswing or is close to bottoming out. This means that no further serious falls in home values are expected.

Clarke continued to say that no one knows when the bottom of the cycle has been reached, but we can look at the signs, which at the moment are pointing to a brighter future. Clarke lashed out at stockbrokers, saying that it is time to show a bit more respect for the opinions of those who have made a comfortable living by investing in property, like chairman of Rawson Properties, Bill Rawson.

Clarke admitted that he would rather follow the advise of those putting out an optimistic view, than the negative advice of some ‘experts’ and economists.

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Tips when buying property

2008-10-27T03:34:00.000-07:00

Buying property in South Africa is one of the biggest investments you can make and could earn you a fair amount of money. There is also some risk involved and one should be well prepared before jumping in.

First of all, it is important to know your budget. Get an idea of exactly how much you qualify for when taking out a home loan. Remember to include transfer costs and conveyance fees in your budget.

Secondly you should decide on a location. If you are buying the property for your family you should look at the surrounding schools, shops, and safety and security of the area.

If the property was bought as an investment with the idea of selling it later, it will be in your best interest to buy into an area where the market has seen major growth.

Once you found the right property to suit your needs, you can make an offer. The purchase price is not set in stone so you can negotiate to get yourself a better deal. Read all documentation carefully and contact a property lawyer if you are not certain about something.

Thirdly you should have the property inspected. This should be done before your sign the contract because your rights as a buyer are minimal due to a voetstoots clause in sales contracts.

Lastly you should have insurance lined up. Get quotes from different companies and choose one that suits your needs.

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