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)
Rent property in South Africa
Monday, December 29, 2008
Tuesday, December 23, 2008
Cape Town Voted Best World City
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.
Buy property in Cape Town
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.
Buy property in Cape Town
Auctioneer Timid About 2009
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.
Buy property in South Africa
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.
Buy property in South Africa
Sunday, December 21, 2008
The Year Ahead: What to Expect
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
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
Wednesday, December 17, 2008
Currency Trend Can Bail Out SA Market
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
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
Tuesday, December 16, 2008
Pros and Cons of Owning Holiday Homes
(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.
But property for sale in South Africa
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.
But property for sale in South Africa
Thursday, December 11, 2008
Rate Cut: What Do the Experts Say
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
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
Wednesday, December 10, 2008
Fewer Tenants are Paying on Time
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.
Rent property 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.
Rent property in South Africa
Tuesday, December 9, 2008
SA Property: Market: What Lies Ahead
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
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
Monday, December 8, 2008
Experts Predict Rise in House Prices
(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.
Buy property in South Africa
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.
Buy property in South Africa
Sunday, December 7, 2008
House Prices are Going Down - Absa
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%.
Buy property for sale in South Africa
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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Thursday, December 4, 2008
Building Contracts: What You Should Know
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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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.
Buy property in South Africa
Wednesday, December 3, 2008
Top Agency Closes Two Offices
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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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.
Find property for sale in South Africa
Monday, December 1, 2008
Paying your dues - Property Tax
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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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.
Find property in South Africa
Wednesday, November 26, 2008
Huge Rental Demand in Camps Bay, Clifton and Bakoven
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
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
Tuesday, November 25, 2008
Why You Need an Estate Agent
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.
Buy property in South Africa
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.
Buy property in South Africa
Monday, November 24, 2008
Choosing and Using a Building Contractor
(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.
Find property for sale in South Africa
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.
Find property for sale in South Africa
Thursday, November 20, 2008
Commission Cuts to Stay in Bussiness
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.
Buy homes for sale in South Africa
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.
Buy homes for sale in South Africa
Property Boss Optimistic About the Future
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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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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Tuesday, November 18, 2008
Why are Suburbanites Moving Back to the Townships?
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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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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Monday, November 17, 2008
2009: A Time to Buy
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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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.
Buy property in Cape Town
Thursday, November 13, 2008
Rental Deposits: Do’s and Don’ts
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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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.
Rent property in South Africa
Wednesday, November 12, 2008
World Cup to Transform SA Property Market
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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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.
Buy property for sale in South Africa
Tuesday, November 11, 2008
The Big Five Challenges Facing the Market
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.
Buy property in South Africa
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.
Buy property in South Africa
Monday, November 10, 2008
Absa Predicts Bleak Future
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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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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Friday, November 7, 2008
Large Demand for Low-Cost Property
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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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.
Search for Property in South Africa
Wednesday, November 5, 2008
Real Estate Clock Predicts Rebound in 2010
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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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.
Find property for sale in South Africa
Inflation Figures Point to Interest Rate Cuts
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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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.
Buy property in South Africa
Tuesday, November 4, 2008
Weakening Rand Attracts Foreign Buyers
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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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.
Seach for property in South Africa
Monday, November 3, 2008
Mortgage Figures Signalling Tough Times
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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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.
Find property for sale in South Africa
Friday, October 31, 2008
Is the Slow Property Market Bottoming Out?
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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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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Thursday, October 30, 2008
Guidelines For Choosing Sectional Title Managing Agents
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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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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Wednesday, October 29, 2008
Avoid Tenants Running a Business from your Premises
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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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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Tuesday, October 28, 2008
Agency Boss Lashes Out
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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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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Monday, October 27, 2008
Tips when buying property
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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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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Friday, October 24, 2008
Keep Tenants Paying on Time
This article is with courtesy of Realestateweb and Bill Rawson (“How to keep your tenants paying and behaving”, 23 October 2008).
Chief executive of the Rawson Property Group, and seasoned investor, Bill Rawson, says that it is of the utmost importance that landlords receive rent from their tenants on time every month. This comes after financial institutions started clamping down on default mortgage bond payments. He added that the days where banks understood a landlord’s predicament regarding tenants not paying rent are over – the National Credit Act made sure of that.
A landlord can find himself blacklisted should he fall behind on bond repayments, and for tenants this means tighter restrictions, like paying a deposit equal to 3 months’ rent as oppose to the earlier one month’s rent. This huge deposit can often only be paid back after a tenant has fully vacated the premises and the landlord has properly assessed damages to the property. This results in tenants not being able to pay the next deposit at their new premises, in turn, resulting in tenants being much less mobile and more likely to renew leases.
Rawson stressed the importance of the selection of tenants. He advised that estate agents and landlords should thoroughly check all references given by potential tenants. It is also wise to use agents with experience in this field.
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Chief executive of the Rawson Property Group, and seasoned investor, Bill Rawson, says that it is of the utmost importance that landlords receive rent from their tenants on time every month. This comes after financial institutions started clamping down on default mortgage bond payments. He added that the days where banks understood a landlord’s predicament regarding tenants not paying rent are over – the National Credit Act made sure of that.
A landlord can find himself blacklisted should he fall behind on bond repayments, and for tenants this means tighter restrictions, like paying a deposit equal to 3 months’ rent as oppose to the earlier one month’s rent. This huge deposit can often only be paid back after a tenant has fully vacated the premises and the landlord has properly assessed damages to the property. This results in tenants not being able to pay the next deposit at their new premises, in turn, resulting in tenants being much less mobile and more likely to renew leases.
Rawson stressed the importance of the selection of tenants. He advised that estate agents and landlords should thoroughly check all references given by potential tenants. It is also wise to use agents with experience in this field.
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Thursday, October 23, 2008
Capital Investments Improving Investment Product
According to information released by property portfolio management company, Capital Investments, they are offering a much improved investment product and also sorting out the problems of one of the country’s major syndicators.
Managing Director of Capital Investments, Jurie Wessels explains that they started out doing syndications but realised that the model wasn’t sustainable for the management company or the investor. He added that an investor does not want to be locked into an investment in a particular property, or group of properties, without the ability to use gearing to expand his investment portfolio. An investor would also want the option to trade out of some properties and into new properties as the area demographics change.
“Our investment model is actually very simple,” says Wessels, “We only invest in commercial properties – office blocks, industrial property and retail space. The properties in our portfolio are geared with bank-issued property bonds. As the rental income repays the bonds, we take the money out of the bonds again and buy additional properties. It is this ability to add properties without receiving new investments that really enables us to add to our clients’ wealth, much more so than the normal, inflation-linked increase in the value of the existing buildings in the portfolio. Syndications are structured to own particular buildings; they are structured not to have this ability.”
Capital Investments recently issued a cautionary announcement on all of the syndications under their management, before they took over the management of the syndications previously owned by Dividend Investments. Details of the proposed transaction cannot be supplied before the relevant information has been distributed to investors, but Capital Investments has confirmed that the structure of the existing syndication will change.
Wessels further explained that syndications make their money when they structure and market the original syndication. Because there is no further fee there is also no incentive for the company or promoter to manage the syndication with the necessary care. According to Wessels this could be seen in the poor quality of the records and poor state of management they encountered when they took over the syndications.
Wessels went on to say that they saw an opportunity when they took over the management of the syndications that had been put together and marketed by Dividend Investments. They want to unlock the value for investors because most of the properties in the syndications were good properties but they needed to improve the management and the financial affairs of the syndications owning them.
Wessels said that they are very proud of what they have achieved in a very short time to bring the affairs of the syndication up-to-date. He explained that they spent a vast amount of time and money to record old transactions and bring records up to date, trace the flow of money between companies in the group, settle inter-syndicate loans, conduct audits of share registers, and update them. They also supervised proper maintenance of the buildings and re-established good, professional relationships with syndication property tenants. The team also recovered as much unpaid rent as possible and let empty space to reduce vacancies appreciably. All of this, Wessels said, had to be done for the more than 70 syndications, altogether more than 160 companies, in the group.
“While we cannot deny that investor interests were sometimes neglected by our management predecessors, we can assure syndication investors that Capital Investments is doing everything in its power to obtain the best possible results from the current situation. In addition, we have to reassure the investing public that the investment advice they received from their financial advisors was sound, based on the available information, at the time. The situation that Capital Investments is rescuing was created by poor management of the syndications by the original promoter.”
Capital Investments wishes to remain transparent in its dealing with the syndications and is meeting with the syndications members. Wessels reassured syndication investors in a recent letter, that a transaction will only be concluded once all members have received full information and given their approval.
(The information in the article is with courtesy of a Press Release by Capital Investments on 7 October 2006)
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Managing Director of Capital Investments, Jurie Wessels explains that they started out doing syndications but realised that the model wasn’t sustainable for the management company or the investor. He added that an investor does not want to be locked into an investment in a particular property, or group of properties, without the ability to use gearing to expand his investment portfolio. An investor would also want the option to trade out of some properties and into new properties as the area demographics change.
“Our investment model is actually very simple,” says Wessels, “We only invest in commercial properties – office blocks, industrial property and retail space. The properties in our portfolio are geared with bank-issued property bonds. As the rental income repays the bonds, we take the money out of the bonds again and buy additional properties. It is this ability to add properties without receiving new investments that really enables us to add to our clients’ wealth, much more so than the normal, inflation-linked increase in the value of the existing buildings in the portfolio. Syndications are structured to own particular buildings; they are structured not to have this ability.”
Capital Investments recently issued a cautionary announcement on all of the syndications under their management, before they took over the management of the syndications previously owned by Dividend Investments. Details of the proposed transaction cannot be supplied before the relevant information has been distributed to investors, but Capital Investments has confirmed that the structure of the existing syndication will change.
Wessels further explained that syndications make their money when they structure and market the original syndication. Because there is no further fee there is also no incentive for the company or promoter to manage the syndication with the necessary care. According to Wessels this could be seen in the poor quality of the records and poor state of management they encountered when they took over the syndications.
Wessels went on to say that they saw an opportunity when they took over the management of the syndications that had been put together and marketed by Dividend Investments. They want to unlock the value for investors because most of the properties in the syndications were good properties but they needed to improve the management and the financial affairs of the syndications owning them.
Wessels said that they are very proud of what they have achieved in a very short time to bring the affairs of the syndication up-to-date. He explained that they spent a vast amount of time and money to record old transactions and bring records up to date, trace the flow of money between companies in the group, settle inter-syndicate loans, conduct audits of share registers, and update them. They also supervised proper maintenance of the buildings and re-established good, professional relationships with syndication property tenants. The team also recovered as much unpaid rent as possible and let empty space to reduce vacancies appreciably. All of this, Wessels said, had to be done for the more than 70 syndications, altogether more than 160 companies, in the group.
“While we cannot deny that investor interests were sometimes neglected by our management predecessors, we can assure syndication investors that Capital Investments is doing everything in its power to obtain the best possible results from the current situation. In addition, we have to reassure the investing public that the investment advice they received from their financial advisors was sound, based on the available information, at the time. The situation that Capital Investments is rescuing was created by poor management of the syndications by the original promoter.”
Capital Investments wishes to remain transparent in its dealing with the syndications and is meeting with the syndications members. Wessels reassured syndication investors in a recent letter, that a transaction will only be concluded once all members have received full information and given their approval.
(The information in the article is with courtesy of a Press Release by Capital Investments on 7 October 2006)
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Wednesday, October 22, 2008
Rental Demand is Plunging
Landlords has been forced to lower their asking rent due to a dip in demand for rental accommodation. This comes after a number of estate agents, including rentproperty.co.za, announced that the latest figures show a 10% drop in asking rentals over the past six months, from an average of R6,854 per month in the first quarter of 2008 to R6,133 per month in the third quarter of this year.
According to Pierre Fourie, CEO of rentproperty.co.za, this can only mean that tenants are feeling the strain and have therefore either downgraded to cheaper accommodation, or moved in with friends or family. Another factor influencing the market is the sudden increase in rental stock available due to homeowners struggling to sell their properties and inevitably moving it to the rental market.
Property management group, Trafalgar, has also seen a surprising dip in rental demand. According to their managing director, Andrew Schaefer, 12% and 15% increase were reported in the first quarter of this year. This has now changed to the standard 10% annual rental increase. Andrew also added that units priced at more than R4000 has been hit the hardest due to tenants downgrading to cheaper options.
This slowdown in the rental market has been met with surprise by most agents and homeowners, which were expecting the exact opposite. The general view was that most would-be buyers would be forced into renting considering the high interest rates and the introduction of the National Credit Act.
The information in this article is courtesy of Joan Muller, “Rental Demand Dips”, Properyty24, October 22, 2008.
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According to Pierre Fourie, CEO of rentproperty.co.za, this can only mean that tenants are feeling the strain and have therefore either downgraded to cheaper accommodation, or moved in with friends or family. Another factor influencing the market is the sudden increase in rental stock available due to homeowners struggling to sell their properties and inevitably moving it to the rental market.
Property management group, Trafalgar, has also seen a surprising dip in rental demand. According to their managing director, Andrew Schaefer, 12% and 15% increase were reported in the first quarter of this year. This has now changed to the standard 10% annual rental increase. Andrew also added that units priced at more than R4000 has been hit the hardest due to tenants downgrading to cheaper options.
This slowdown in the rental market has been met with surprise by most agents and homeowners, which were expecting the exact opposite. The general view was that most would-be buyers would be forced into renting considering the high interest rates and the introduction of the National Credit Act.
The information in this article is courtesy of Joan Muller, “Rental Demand Dips”, Properyty24, October 22, 2008.
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Monday, October 20, 2008
SA Property Market Not Only One Battling
South African homeowners and estate agents can rest assure that they are not alone in their battle with the poor property market.
This comes after Mark Friend, vice president of Realogy Holdings (the holding company for a number of leading real estate organisations including ERA), announced at a recent meeting with local agents, that South Africa’s conditions reflected those of the rest of the world.
This information is based on first-hand experience since he deals with responsibility in Australia, Africa and Asia. He also added that the situations in all of these countries are similar regarding poor business conditions, credit restrictions, high interest rates, increasing inflation and declining disposable income.
Surprisingly Mark also said that South Africa is somewhat better off due to the early introduction of the National Credit Act.
Mark finished off by saying that all should be optimistic because things will start looking up. He added that it is vital for homeowners to use every option to stay in a market that has shown us all how quickly things can change.
The information in this article is courtesy of Property24.com, (“SA owners not alone in storm”, Property24.com, 21 October 2008).
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This comes after Mark Friend, vice president of Realogy Holdings (the holding company for a number of leading real estate organisations including ERA), announced at a recent meeting with local agents, that South Africa’s conditions reflected those of the rest of the world.
This information is based on first-hand experience since he deals with responsibility in Australia, Africa and Asia. He also added that the situations in all of these countries are similar regarding poor business conditions, credit restrictions, high interest rates, increasing inflation and declining disposable income.
Surprisingly Mark also said that South Africa is somewhat better off due to the early introduction of the National Credit Act.
Mark finished off by saying that all should be optimistic because things will start looking up. He added that it is vital for homeowners to use every option to stay in a market that has shown us all how quickly things can change.
The information in this article is courtesy of Property24.com, (“SA owners not alone in storm”, Property24.com, 21 October 2008).
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Small Agencies Suffer Due to Slow Market
The slump in the property market is now causing a substantial number of estate agents to close their doors. According to Lew Geffen Sotheby’s International Realty this can be seen in the estimated 30% to 40% of agents that left after last year’s boom in the property market.
Some bigger firms like Lew Greffen feels that this is good for consumers since it has taken out unprofessional agents and has improved services of established brands like themselves.
In a statement earlier this week, Lew Greffen Sotheby’s said that the industry is shedding agents who are unable to deliver a professional service to the client. They added that the ascendancy of names such as themselves means that client benefits form the various services they had to offer, which includes local and international referrals, estate agent training and market support.
In response, smaller players like Fatima Ahmed said that they are being pushed out of the industry. She stated that she has been in the business for 15 years and that her clients all came from past referrals.
Another small property entrepreneur, Alan Erickson owns Viking Properties in Lansdowne. He also feels that the industry giants are swallowing smaller agencies during difficult times, and added that the big guns can sustain themselves through rough times by scooping up the clients of those smaller agencies who had to pack up.
The information in this article is courtesy of Gershwin Wanneburg (“Property Industry Sheds Agents”, www.iol.co.za, 20 October 2008).
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Some bigger firms like Lew Greffen feels that this is good for consumers since it has taken out unprofessional agents and has improved services of established brands like themselves.
In a statement earlier this week, Lew Greffen Sotheby’s said that the industry is shedding agents who are unable to deliver a professional service to the client. They added that the ascendancy of names such as themselves means that client benefits form the various services they had to offer, which includes local and international referrals, estate agent training and market support.
In response, smaller players like Fatima Ahmed said that they are being pushed out of the industry. She stated that she has been in the business for 15 years and that her clients all came from past referrals.
Another small property entrepreneur, Alan Erickson owns Viking Properties in Lansdowne. He also feels that the industry giants are swallowing smaller agencies during difficult times, and added that the big guns can sustain themselves through rough times by scooping up the clients of those smaller agencies who had to pack up.
The information in this article is courtesy of Gershwin Wanneburg (“Property Industry Sheds Agents”, www.iol.co.za, 20 October 2008).
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Thursday, October 16, 2008
Repossession: Don’t Wait Until Its Too Late
With the current slow down in the residential property market, more and more bondholders are losing their homes as a result of falling behind on their payments. Johan van der Merwe, owner of Rawson’s Somerset West, Strand and Gordon’s Bay franchise, says that steps can be taken to avoid or minimize the losses involved when having your home repossessed.
According to Van der Merwe he has yet to find a case where a repossessed home was bought on auction for anything close to its market value. Because of this, it is preferable for a bondholder facing repossession to speak to his estate agent about selling his property as soon as possible. This will ensure a better price than at an auction.
Van der Merwe added that it is not uncommon for an agent to help the bondholder retain his ownership by advising him to negotiate a new deal with a bank.
Managing Director of Rawson’s, Tony Clarke, stated that every bank that he has discussed bondholders’ problems with has indicated that they are prepared to make the necessary adjustments, like extending the bond repayment or allowing the bondholder to pay only the interest for a period of time.
The information in this article is courtesy of Property24, “Don’t Wait Until Repossession”, Property24, 17 October 2008.
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According to Van der Merwe he has yet to find a case where a repossessed home was bought on auction for anything close to its market value. Because of this, it is preferable for a bondholder facing repossession to speak to his estate agent about selling his property as soon as possible. This will ensure a better price than at an auction.
Van der Merwe added that it is not uncommon for an agent to help the bondholder retain his ownership by advising him to negotiate a new deal with a bank.
Managing Director of Rawson’s, Tony Clarke, stated that every bank that he has discussed bondholders’ problems with has indicated that they are prepared to make the necessary adjustments, like extending the bond repayment or allowing the bondholder to pay only the interest for a period of time.
The information in this article is courtesy of Property24, “Don’t Wait Until Repossession”, Property24, 17 October 2008.
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Tips to Negotiate Lower Rent
According to FNB’s Residential Property barometer, the rental market activity was above average for the first quarter of 2008, with the homebuyers market sitting at a mediocre level.
This proves that more and more people are choosing renting over buying, showing the importance of being aware of the negotiating power one has when looking at a rental property.
Would-be tenants should find out what similar properties in the area cost to rent. This can be used as a bargaining chip to negotiate lower rent. You can also page through the Junk Mail and other property listings to get a good idea of the market price.
Also find out how many units are standing open when moving into a complex or block of flats. If there are a lot of vacancies, it is the perfect time to negotiate a lower price.
Always let your landlord know how responsible you are by handing over references from work, or telling them about your qualifications. This will put you in a stronger position to negotiate.
Offer to sign a longer lease in return for a rent deduction and a guarantee that the rent won’t rise above inflation for this duration.
Find out how long a property has been empty. A landlord loses money every day his property is vacant, which means you can negotiate a good rent.
By offering to do some maintenance, like painting or maintaining the garden, you can also shave some money off your rent.
All and all it is important to negotiate. Offering 30% less is probably a bit extreme, but you should be able to get between 15-20%.
(The information in this article is courtesy of Karen Iten, “It’s a Good Time to Negotiate Lower Rent” Moneyweb, 15 September 2008.)
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This proves that more and more people are choosing renting over buying, showing the importance of being aware of the negotiating power one has when looking at a rental property.
Would-be tenants should find out what similar properties in the area cost to rent. This can be used as a bargaining chip to negotiate lower rent. You can also page through the Junk Mail and other property listings to get a good idea of the market price.
Also find out how many units are standing open when moving into a complex or block of flats. If there are a lot of vacancies, it is the perfect time to negotiate a lower price.
Always let your landlord know how responsible you are by handing over references from work, or telling them about your qualifications. This will put you in a stronger position to negotiate.
Offer to sign a longer lease in return for a rent deduction and a guarantee that the rent won’t rise above inflation for this duration.
Find out how long a property has been empty. A landlord loses money every day his property is vacant, which means you can negotiate a good rent.
By offering to do some maintenance, like painting or maintaining the garden, you can also shave some money off your rent.
All and all it is important to negotiate. Offering 30% less is probably a bit extreme, but you should be able to get between 15-20%.
(The information in this article is courtesy of Karen Iten, “It’s a Good Time to Negotiate Lower Rent” Moneyweb, 15 September 2008.)
Find property for sale in South Africa
Wednesday, October 15, 2008
Low Income Housing Now Affordable
Nedbank has launched an affordable housing finance scheme available to South Africans earning less than R9 760, which makes first time home ownership just that much more accessible. The bank has teamed up with the French Development Agency (AFD) to provide loans for low income housing.
Jeff Lawrence, Head of Affordable Housing at Nedbank Retail, says that despite efforts by the government, there are still many challenges that plague the low income housing sector, such as the ever-growing issues of affordability, where costs associated with land, infrastructure, building and high interest rates are by far exceeding market earnings.
The proposed housing scheme applies innovative and first-to-market initiatives that include a once-off non-refundable grant of R8 500 for the various applicants. The grant will be employed to cover legal and up front home loan costs, with the remainder helping to reduce the total loan amount.
The rate structure benefits clients in that the interest rate will never go up, but may come down should the interest rates move below the original agreement rate. This will ensure that home owners are protected from the dangers and uncertainties involved with a fluctuating interest rate environment.
The period for the home loan agreement is typically 20 years, which exceeds the 12 year reducing cap period. After 12 years, the agreement will revert to a variable rate, but the client is able to negotiate any other interest rate option that may be available at the time.
Lawrence says that the latest initiative with AFD is designed to address the affordability issues in the current market by making it possible for more people to qualify for housing finance. He adds that cash injections like that from AFD are necessary in that they work to remove barriers to home ownership.
“Nedbank is proud of its partnership with AFD as it will enable the bank to tap into new markets and play a role in making a contribution to help South Africans access home loans and financial services,” says Lawrence. The program will benefit from the bank’s knowledge of the local housing market, as well as its infrastructure.
He goes on to say, “What makes this initiative even more attractive is that it is not restricted or linked to any particular housing development, allowing people to buy homes of their choice, in the specified areas”. Initially the program will be restricted to pilot sites laid out for the purposes of first time home buyers, with the possibility that it will be extended to other areas within Gauteng and other provinces in the country.
Lawrence notes that it was necessary to understand the concerns and needs of the target market. “The offer has been designed to address these concerns and also prove to this market that home ownership is within their grasp”. The loan will encompass a borrowers education program, which is aimed at assisting and educating clients about the nuances involved with home ownership and maintenance.
Some of these include understanding and clarifying the terms and conditions, highlighting the client’s rights and responsibilities before signing the contract, as well as addressing any questions or concerns the client might have. “As a responsible lender, we want to ensure that clients make informed decisions when entering into the home loan agreement,” Lawrence says.
AFD Regional Representative, Christophe Richard says that, “AFD fosters access to home ownership for populations which would normally be excluded from it and promotes support programs in partnership with private banks. AFD financing makes it possible to reduce the amount in capital borrowed by households that meet specific criteria to implement training for borrowers. The aim is to help banks go beyond the commitments of the Financial Sector Charter”.
The initiative for affordable housing comes after a Memorandum of Understanding was signed between the country’s four retail banks and the Minister of Housing in 2005 and is also in line with a commitment made by the various banks to the Financial Charter signed in October 2003. The banking sector committed to providing R42 billion in low income housing finance by 31 December 2008. In light of all this, it seems that Nedbank is indeed holding up its side of the bargain.
The information in this article is courtesy of Durr Online (“New home loan finance for under R10 000 earners”, Moneyweb, 29 September 2008).
Find property in South Africa.
Jeff Lawrence, Head of Affordable Housing at Nedbank Retail, says that despite efforts by the government, there are still many challenges that plague the low income housing sector, such as the ever-growing issues of affordability, where costs associated with land, infrastructure, building and high interest rates are by far exceeding market earnings.
The proposed housing scheme applies innovative and first-to-market initiatives that include a once-off non-refundable grant of R8 500 for the various applicants. The grant will be employed to cover legal and up front home loan costs, with the remainder helping to reduce the total loan amount.
The rate structure benefits clients in that the interest rate will never go up, but may come down should the interest rates move below the original agreement rate. This will ensure that home owners are protected from the dangers and uncertainties involved with a fluctuating interest rate environment.
The period for the home loan agreement is typically 20 years, which exceeds the 12 year reducing cap period. After 12 years, the agreement will revert to a variable rate, but the client is able to negotiate any other interest rate option that may be available at the time.
Lawrence says that the latest initiative with AFD is designed to address the affordability issues in the current market by making it possible for more people to qualify for housing finance. He adds that cash injections like that from AFD are necessary in that they work to remove barriers to home ownership.
“Nedbank is proud of its partnership with AFD as it will enable the bank to tap into new markets and play a role in making a contribution to help South Africans access home loans and financial services,” says Lawrence. The program will benefit from the bank’s knowledge of the local housing market, as well as its infrastructure.
He goes on to say, “What makes this initiative even more attractive is that it is not restricted or linked to any particular housing development, allowing people to buy homes of their choice, in the specified areas”. Initially the program will be restricted to pilot sites laid out for the purposes of first time home buyers, with the possibility that it will be extended to other areas within Gauteng and other provinces in the country.
Lawrence notes that it was necessary to understand the concerns and needs of the target market. “The offer has been designed to address these concerns and also prove to this market that home ownership is within their grasp”. The loan will encompass a borrowers education program, which is aimed at assisting and educating clients about the nuances involved with home ownership and maintenance.
Some of these include understanding and clarifying the terms and conditions, highlighting the client’s rights and responsibilities before signing the contract, as well as addressing any questions or concerns the client might have. “As a responsible lender, we want to ensure that clients make informed decisions when entering into the home loan agreement,” Lawrence says.
AFD Regional Representative, Christophe Richard says that, “AFD fosters access to home ownership for populations which would normally be excluded from it and promotes support programs in partnership with private banks. AFD financing makes it possible to reduce the amount in capital borrowed by households that meet specific criteria to implement training for borrowers. The aim is to help banks go beyond the commitments of the Financial Sector Charter”.
The initiative for affordable housing comes after a Memorandum of Understanding was signed between the country’s four retail banks and the Minister of Housing in 2005 and is also in line with a commitment made by the various banks to the Financial Charter signed in October 2003. The banking sector committed to providing R42 billion in low income housing finance by 31 December 2008. In light of all this, it seems that Nedbank is indeed holding up its side of the bargain.
The information in this article is courtesy of Durr Online (“New home loan finance for under R10 000 earners”, Moneyweb, 29 September 2008).
Find property in South Africa.
How is the Stock Market Affecting Residential Property?
The information in this article is courtesy of Saul Geffen and Samuel Seeff (“Stock Market Woes: Good or Bad for Residential Property?”, Realestateweb, 14 October 2008)
Realestateweb reports:
Two leading property figures are divided over whether the world stock market is having a good or bad effect on residential property.
Saul Geffen, chief executive officer of Ooba (one of the country’s leading mortgage originators), is of the opinion that stock market woes could boost property.
He said that recent events are likely to lead to investors looking at property as a safe investment after losing confidence in shares and banks. Property is something you can touch, see and feel. This and the fact that it can’t be taken away from you, make it a safe investment with the possibility of a worldwide recession looming.
Geffen added that the bargaining power of cash will put cash buyers in a strong position to snap up property but other investors will also put their trust in the safety of property investment.
According to Geffen the positive effect can already be seen in the average purchase price in September jumping 2.4% from August. This brings the price rise since July to 1.6%.
Samuel Seeff, chairman of Seeff Properties does not share Geffen’s optimism on this point. He expects the current financial troubles to have a negative effect on the residential sector, resulting in buyers being more cautious.
Seeff warned that an anticipated recovery in the market early next year would be delayed due to the global financial crisis. He added that more and more investors would choose to wait and see how the collapsing of the US financial instituitions will affect the market.
Seeff insisted that a recovery in the market is still certain but added that there is undoubtedly a concern on how our banks’ liquidity is affecting the granting of loans.
According to him, one out of two bond applications are being rejected since the inception of the National Credit Act,
Property for sale in South Africa
Realestateweb reports:
Two leading property figures are divided over whether the world stock market is having a good or bad effect on residential property.
Saul Geffen, chief executive officer of Ooba (one of the country’s leading mortgage originators), is of the opinion that stock market woes could boost property.
He said that recent events are likely to lead to investors looking at property as a safe investment after losing confidence in shares and banks. Property is something you can touch, see and feel. This and the fact that it can’t be taken away from you, make it a safe investment with the possibility of a worldwide recession looming.
Geffen added that the bargaining power of cash will put cash buyers in a strong position to snap up property but other investors will also put their trust in the safety of property investment.
According to Geffen the positive effect can already be seen in the average purchase price in September jumping 2.4% from August. This brings the price rise since July to 1.6%.
Samuel Seeff, chairman of Seeff Properties does not share Geffen’s optimism on this point. He expects the current financial troubles to have a negative effect on the residential sector, resulting in buyers being more cautious.
Seeff warned that an anticipated recovery in the market early next year would be delayed due to the global financial crisis. He added that more and more investors would choose to wait and see how the collapsing of the US financial instituitions will affect the market.
Seeff insisted that a recovery in the market is still certain but added that there is undoubtedly a concern on how our banks’ liquidity is affecting the granting of loans.
According to him, one out of two bond applications are being rejected since the inception of the National Credit Act,
Property for sale in South Africa
Tuesday, October 14, 2008
Get a Better Rate on Your Home Loan
(Accessed from www.realestateweb.co.za on 11 September 2008
Mike Spencer*
11 September 2008
With interest rates so high it is important to get the best possible rate on your home loan.
According to valuer and estate agent Mike Spencer of Platinum Global in Bloemfontein, you qualify for a discount when you have good credit records, high value bonds, high deposits and multiple bonds. Using numerous services at your lending bank and being a high-income client will also earn you discount.
He strongly advises anyone with a bond to ask for a discount. Only a few people ask for a better rate and simple accept the one given by the bank. Surprisingly you might receive and extra 0.25% or 0.5% discount if you do so.
Another tip is to talk to your bank about consolidating your loans. By doing this you will end up paying fewer fees, a lower interest rate and smaller bank charges.
Consolidating your loans with one bank will also result in lower cost and interest rates.
There is a government penalty tax on bonds over 80% up to 1.5%. By moving funds around you can reduce the very high percentage bond down to below this percentage.
Remember that banks will reward you for having more services at one bank. It would be wise to have your cheque and bankcard accounts at the same bank where you have your loan. Always ask your bank about the benefits should you bring all your business to them.
Mike Spencer also argues that it is wise to consider consolidating products such as Absa One. Here, the bank will approve an overall level of credit available to you and all your assets would be taken as security in return. This is a considerable saving in cost because they do not usually register a bond against your property.
You will then receive a chequebook, credit card and petrol card that is linked to this account. Each night your daily expenses are paid for from this account. This means that you live of a single account resulting in a low interest rate. You can also use this account to buy property, cars and live up to your credit limit. Everything you buy is cash, resulting in cash discounts. You will pay an agreed minimum and interest is at the bond rate less you discount.
Find property for sale in South Africa
Mike Spencer*
11 September 2008
With interest rates so high it is important to get the best possible rate on your home loan.
According to valuer and estate agent Mike Spencer of Platinum Global in Bloemfontein, you qualify for a discount when you have good credit records, high value bonds, high deposits and multiple bonds. Using numerous services at your lending bank and being a high-income client will also earn you discount.
He strongly advises anyone with a bond to ask for a discount. Only a few people ask for a better rate and simple accept the one given by the bank. Surprisingly you might receive and extra 0.25% or 0.5% discount if you do so.
Another tip is to talk to your bank about consolidating your loans. By doing this you will end up paying fewer fees, a lower interest rate and smaller bank charges.
Consolidating your loans with one bank will also result in lower cost and interest rates.
There is a government penalty tax on bonds over 80% up to 1.5%. By moving funds around you can reduce the very high percentage bond down to below this percentage.
Remember that banks will reward you for having more services at one bank. It would be wise to have your cheque and bankcard accounts at the same bank where you have your loan. Always ask your bank about the benefits should you bring all your business to them.
Mike Spencer also argues that it is wise to consider consolidating products such as Absa One. Here, the bank will approve an overall level of credit available to you and all your assets would be taken as security in return. This is a considerable saving in cost because they do not usually register a bond against your property.
You will then receive a chequebook, credit card and petrol card that is linked to this account. Each night your daily expenses are paid for from this account. This means that you live of a single account resulting in a low interest rate. You can also use this account to buy property, cars and live up to your credit limit. Everything you buy is cash, resulting in cash discounts. You will pay an agreed minimum and interest is at the bond rate less you discount.
Find property for sale in South Africa
Monday, October 13, 2008
How to Survive the Global Market Crash
(Accessed from www.realestateweb.co.za on 10 October 2008)
Jackie Cameron*
Survive the Crash
While the world has been inundated with news about plummeting stock markets, financial systems in trouble and anticipation of a global recession in the last week, there are some estate agency bosses in South Africa that appear quite optimistic about the state of the local market.
Recent statements from Rawson Properties, Pam Golding and RE/MAX have been upbeat, suggesting that we may well have seen the worst in the residential market and things are set to improve. News that interest rates will remain unchanged has reinforced this hope and a sudden surge in sales and increased attendance at show houses are also positive signs for the property market.
However, there are those who believe that the views of estate agents should really be taken with a pinch of salt, as they have never been known to speak negatively about the market even when things are looking seriously dire. One has to ask whether the improvement in sales is really a sign that things are looking up? Or is it merely a ploy to inspire buyers who have been sitting on the fence?
According to Bill Rawson, sales for his group were up an incredible 250% in September and he urged that, “Despite the difficulties with getting bond finance, now is a wonderful time to buy. This is a message we need to put out into the market, which in its reaction to the downturn has now grown overly cautious and negative. Property remains a top-line investment and this has never been truer than in today’s tough sale conditions”.
Rawson is right in that property is an excellent long term investment. However, in the short term, those who take out mortgages and rent are likely to experience tight financial conditions at the very least. Many businesses and consumers are bound to fall into money trouble at some point and banks are far stricter in their lending criteria.
ABSA has been tracking trends in house prices for decades and only expects the situation to turn around at some stage next year. Real property prices, taking into account inflation, have dropped by around 10% annually, which means that purchasing power has been lost if your cash has been held in bricks and mortar.
Barry Sergeant’s analysis of the South African economy seems to point to tougher times ahead, not easier ones (Moneyweb). He believes that interest rates can’t be cut in line with the globally coordinated central bank packages simply because our economy is not in good shape.
He says that with the staggeringly high unemployment rate and trade deficits, as well as the minimal foreign reserves, the country is left “with little choice but to perform somersaults, and other awkward things, to attract foreign cash inflows”. Sergeant notes that investors tend to borrow elsewhere at a lower interest rate and then send their money over to South Africa to earn more and make a profit.
Mike Flux, executive director of Madison Property Fund Managers, also seems to be more pessimistic about the situation, primarily due to economic reasons. He warned that up to a third of jobs in the property sector could be lost over the next two years. “Add in more global meltdown, multiple recessions, plus a dash of Zuma election fun and we are in for interesting times” (Realestateweb).
The fact that interest rates weren’t cut this week shouldn’t come as a surprise. Reserve Bank governor Tito Mboweni cited a reason for the decision as being that “wages show inflation expectations are not anchored”. His own salary increase says a lot about this, with an annual raise of 30%, which is considerably higher than inflation expectations.
What about those of us who earn ordinary salaries though? The reality is that we need to get back to old fashioned basics. Draw up a budget listing your income and all of your bills and then trim the unnecessary monthly expenses. Perhaps it’s time to revisit your car and household insurance, either insisting on a reduction in your premium for your car that is now a year older or shopping around for a better rate.
You could even look at swapping your home loan for a better deal. Banks, like insurance companies, are not likely to reward you for all the years that you have been in business with them. Perhaps it’s time to trade in your car for a more economical one or to change your cell phone contract to pay as you go. It is amazing how much you can save from cutting out the unnecessary treats and shaving costs here and there adds up.
Buy property in South Africa.
Jackie Cameron*
Survive the Crash
While the world has been inundated with news about plummeting stock markets, financial systems in trouble and anticipation of a global recession in the last week, there are some estate agency bosses in South Africa that appear quite optimistic about the state of the local market.
Recent statements from Rawson Properties, Pam Golding and RE/MAX have been upbeat, suggesting that we may well have seen the worst in the residential market and things are set to improve. News that interest rates will remain unchanged has reinforced this hope and a sudden surge in sales and increased attendance at show houses are also positive signs for the property market.
However, there are those who believe that the views of estate agents should really be taken with a pinch of salt, as they have never been known to speak negatively about the market even when things are looking seriously dire. One has to ask whether the improvement in sales is really a sign that things are looking up? Or is it merely a ploy to inspire buyers who have been sitting on the fence?
According to Bill Rawson, sales for his group were up an incredible 250% in September and he urged that, “Despite the difficulties with getting bond finance, now is a wonderful time to buy. This is a message we need to put out into the market, which in its reaction to the downturn has now grown overly cautious and negative. Property remains a top-line investment and this has never been truer than in today’s tough sale conditions”.
Rawson is right in that property is an excellent long term investment. However, in the short term, those who take out mortgages and rent are likely to experience tight financial conditions at the very least. Many businesses and consumers are bound to fall into money trouble at some point and banks are far stricter in their lending criteria.
ABSA has been tracking trends in house prices for decades and only expects the situation to turn around at some stage next year. Real property prices, taking into account inflation, have dropped by around 10% annually, which means that purchasing power has been lost if your cash has been held in bricks and mortar.
Barry Sergeant’s analysis of the South African economy seems to point to tougher times ahead, not easier ones (Moneyweb). He believes that interest rates can’t be cut in line with the globally coordinated central bank packages simply because our economy is not in good shape.
He says that with the staggeringly high unemployment rate and trade deficits, as well as the minimal foreign reserves, the country is left “with little choice but to perform somersaults, and other awkward things, to attract foreign cash inflows”. Sergeant notes that investors tend to borrow elsewhere at a lower interest rate and then send their money over to South Africa to earn more and make a profit.
Mike Flux, executive director of Madison Property Fund Managers, also seems to be more pessimistic about the situation, primarily due to economic reasons. He warned that up to a third of jobs in the property sector could be lost over the next two years. “Add in more global meltdown, multiple recessions, plus a dash of Zuma election fun and we are in for interesting times” (Realestateweb).
The fact that interest rates weren’t cut this week shouldn’t come as a surprise. Reserve Bank governor Tito Mboweni cited a reason for the decision as being that “wages show inflation expectations are not anchored”. His own salary increase says a lot about this, with an annual raise of 30%, which is considerably higher than inflation expectations.
What about those of us who earn ordinary salaries though? The reality is that we need to get back to old fashioned basics. Draw up a budget listing your income and all of your bills and then trim the unnecessary monthly expenses. Perhaps it’s time to revisit your car and household insurance, either insisting on a reduction in your premium for your car that is now a year older or shopping around for a better rate.
You could even look at swapping your home loan for a better deal. Banks, like insurance companies, are not likely to reward you for all the years that you have been in business with them. Perhaps it’s time to trade in your car for a more economical one or to change your cell phone contract to pay as you go. It is amazing how much you can save from cutting out the unnecessary treats and shaving costs here and there adds up.
Buy property in South Africa.
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