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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Friday, October 31, 2008
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.)
Find property for sale in South Africa
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.
Thursday, October 9, 2008
Real Estate Training Courses Given New Lease
SAPOA Extends its Program
The South African Property Owners Association (SAPOA) aims to expand and streamline its existing training and development program in the coming months, with courses set to be launched early next year. In a bid to keep up with current market trends, SAPOA’s two property training programs will be restructured and the quality of the standards improved.
Essentially, the move will see the introduction of an Introduction to Commercial Property Program (ICPP) and an Advanced Commercial Property Program (ACPP). Neil Gopal, CEO of SAPOA says of the new courses, “We are partnering with accredited institutions to ensure control of course standards throughout the country”.
Both the new programs have been implemented in response to member feedback and in a bid to reassess the relevance of information in the current market, working to differentiate between that which has become redundant or erroneous and that which is important. New developments such as the Green Building initiative and the Transformation Charter for the Property Sector will also be introduced.
The restructuring of the existing association ultimately aims to maintain a level of quality control and to set standards on a national level. Desired outcomes will be discussed before commencement and the actual outcomes will be evaluated on completion of the courses.
The assessment will be directed towards the promotion of understanding, applying and disseminating new information. SAPOA’s goal is to partner with universities and provide delegates with a certificate of competency rather than a certificate of attendance.
The ICPP is directed at people who have no previous experience or formal knowledge in either commercial or industrial property. The target group for this introductory course would likely include property administrators and matriculants. It is intended to give an overview of the property market, a general introduction to property terms and the basic principles of property marketing. Successful completion of the ICPP would be a prerequisite for entry into the ACPP.
The advanced course is designed for people who have some prior knowledge and/or practical experience in commercial or industrial property, which translates into around two or three years work experience in the industry. The necessary knowledge would include property economics, important legislative acts, residential and commercial property valuation and an overview of town planning processes in South Africa.
The Chairman of the SAPOA Education, Training and Development Committee, Professor Francois Viruly says, “We believe we are offering a return on investment for any person attending these courses. Our ultimate aim is to align the courses to the new unit standards for the commercial property industry”. Courses are set to begin in the first half of 2009.
The information in this article is courtesy of Jaclyn Lovell (“SAPOA to expand existing property training programme”, ITInews, 9 October 2008).
Property in South Africa.
The South African Property Owners Association (SAPOA) aims to expand and streamline its existing training and development program in the coming months, with courses set to be launched early next year. In a bid to keep up with current market trends, SAPOA’s two property training programs will be restructured and the quality of the standards improved.
Essentially, the move will see the introduction of an Introduction to Commercial Property Program (ICPP) and an Advanced Commercial Property Program (ACPP). Neil Gopal, CEO of SAPOA says of the new courses, “We are partnering with accredited institutions to ensure control of course standards throughout the country”.
Both the new programs have been implemented in response to member feedback and in a bid to reassess the relevance of information in the current market, working to differentiate between that which has become redundant or erroneous and that which is important. New developments such as the Green Building initiative and the Transformation Charter for the Property Sector will also be introduced.
The restructuring of the existing association ultimately aims to maintain a level of quality control and to set standards on a national level. Desired outcomes will be discussed before commencement and the actual outcomes will be evaluated on completion of the courses.
The assessment will be directed towards the promotion of understanding, applying and disseminating new information. SAPOA’s goal is to partner with universities and provide delegates with a certificate of competency rather than a certificate of attendance.
The ICPP is directed at people who have no previous experience or formal knowledge in either commercial or industrial property. The target group for this introductory course would likely include property administrators and matriculants. It is intended to give an overview of the property market, a general introduction to property terms and the basic principles of property marketing. Successful completion of the ICPP would be a prerequisite for entry into the ACPP.
The advanced course is designed for people who have some prior knowledge and/or practical experience in commercial or industrial property, which translates into around two or three years work experience in the industry. The necessary knowledge would include property economics, important legislative acts, residential and commercial property valuation and an overview of town planning processes in South Africa.
The Chairman of the SAPOA Education, Training and Development Committee, Professor Francois Viruly says, “We believe we are offering a return on investment for any person attending these courses. Our ultimate aim is to align the courses to the new unit standards for the commercial property industry”. Courses are set to begin in the first half of 2009.
The information in this article is courtesy of Jaclyn Lovell (“SAPOA to expand existing property training programme”, ITInews, 9 October 2008).
Property in South Africa.
Wednesday, October 8, 2008
What Effect Will Crisis Have on SA?
An article published by The Times discusses Nedbank chief economist, Dr Dennis Dykes’ view that the current crisis in the US could potentially impact South Africa far less than many other countries around the world.
Dykes argues that countries with extremely high household debt to income ratios, such as the UK and Australia (both currently at 160%) are at a much higher risk than South Africa (at 76%).
“Banks in these countries are reluctant and unable to grant more credit to consumers, which will affect all aspects of these economies, particularly property prices,” according to Dykes. He goes on to say that the current weakness in South African property prices is more likely cyclical than structural.
“In other words, the global crisis is not really the cause of the slowdown in our property market. Higher interest rates, coupled with huge gains in house prices over the last few years, were already having a cooling effect on our property market,” Dykes explains.
He adds that, “There is also a good possibility that interest rates in South Africa will decrease over the next few months, as global and local inflation slows. This will bring confidence back into the local housing market. However, a strong recovery is unlikely in the short term”.
Another factor is that none of the big South African banks have been directly exposed to the subprime market in the US. “Although there could be some counter-party losses resulting from bank failures elsewhere, it is likely that the direct impact will be very minimal,” Dykes notes.
He also says that the consolidation that occurred in the South African banking industry a few years ago left those remaining in the game very strong financially. While it has not been expressly stated by the government, Dykes concludes that it would no doubt back up the banking system should this ever be required.
The information in this article is courtesy of I-Net Bridge (“Crisis shouldn’t hit SA houses: Dykes”, The Times, 8 October 2008).
Buy or sell property in South Africa.
Dykes argues that countries with extremely high household debt to income ratios, such as the UK and Australia (both currently at 160%) are at a much higher risk than South Africa (at 76%).
“Banks in these countries are reluctant and unable to grant more credit to consumers, which will affect all aspects of these economies, particularly property prices,” according to Dykes. He goes on to say that the current weakness in South African property prices is more likely cyclical than structural.
“In other words, the global crisis is not really the cause of the slowdown in our property market. Higher interest rates, coupled with huge gains in house prices over the last few years, were already having a cooling effect on our property market,” Dykes explains.
He adds that, “There is also a good possibility that interest rates in South Africa will decrease over the next few months, as global and local inflation slows. This will bring confidence back into the local housing market. However, a strong recovery is unlikely in the short term”.
Another factor is that none of the big South African banks have been directly exposed to the subprime market in the US. “Although there could be some counter-party losses resulting from bank failures elsewhere, it is likely that the direct impact will be very minimal,” Dykes notes.
He also says that the consolidation that occurred in the South African banking industry a few years ago left those remaining in the game very strong financially. While it has not been expressly stated by the government, Dykes concludes that it would no doubt back up the banking system should this ever be required.
The information in this article is courtesy of I-Net Bridge (“Crisis shouldn’t hit SA houses: Dykes”, The Times, 8 October 2008).
Buy or sell property in South Africa.
Have We Reached the Bottom of the Cycle?
(Accessed from www.realestateweb.co.za on October 7, 2008.)
Real estate veteran Bill Rawson says that while house prices are down, national sales are up dramatically, which suggests that we have reached the bottom of the cycle. Perhaps the most common mistake made by sellers in the current market is to insist on an asking price that is no longer acceptable.
While property prices in the Cape continue to perform better than most other provinces in South Africa, they are still 20% off their peak in 2007. Often when sellers find that the offers they have been receiving reflect this then they enter a state of denial, blame the agent, the advertising or any other factor and refuse to drop below the original asking price.
This tends to leave the property on the market for six to twelve months, after which it is probably below market value due to a certain stigma that it may have picked up. Buyers are generally suspicious of homes that have been on the market for so long, assuming that there is some hidden fault that prevents them from selling.
The right time to drop your asking price is the moment you realize that the price is not going to be accepted. Once you do this, it is highly likely that some of the original potential buyers will regain interest in the property. While it can be emotionally upsetting for a seller to reduce the price on a home when he or she has spent time and money lavishing it with care, buyers are in the best position that they have been for nine years, so it is really no use trying to buck the trend – it almost never works.
The total number of homes on the market has fallen by 20% and the time taken to sell a property is now between twelve and fifteen weeks, which is nearly twice as long as in 2007. Rawson also doesn’t see the situation changing any time soon, although the Reserve Bank’s decision not to raise interest rates seems to have stabilized the market somewhat and probably signals the end of the downturn.
The veteran goes on to say that now is a great time to buy, despite the difficulties in obtaining bond finance. Property is still a top line investment and this has never been truer than in today’s tight market conditions. Consumers have grown overly cautious and negative in the current market climate and its time to dispel these reactions.
Rawson Properties, which has just over 140 franchises across the country, has recovered from a low in May/June to record a 250% increase in sales in September. However, Bill Rawson concedes that this trend is by no means universal and that his company is possibly unique in this aspect. Many smaller agencies are still going under and agents are dwindling, with the national figure down to 55 000 from 85 000.
With the latest political developments, interest may well be likely to decline, but there are questions being raised about the direction the new political leadership will take and exactly how ‘fairness to all’ will play out in terms of the dispensation. So far, it seems to have been handled quite well.
An encouraging sign is that South Africans seem to be more accepting of the new price structures in the property market, which often involves scaling down. Rawson has seen an increase in large deposits recently (up to 30% of the sale price), which also reflects that buyers are scaling down.
Rawson adds that, “Ongoing branding and marketing, with an increased emphasis on sophisticated customer related IT systems, ongoing support for franchisees with training, advice and encouragement and upgrading all of the support systems (again, particularly those that are IT related) are the factors that are taking the Rawson group forward”.
Find property in South Africa.
Real estate veteran Bill Rawson says that while house prices are down, national sales are up dramatically, which suggests that we have reached the bottom of the cycle. Perhaps the most common mistake made by sellers in the current market is to insist on an asking price that is no longer acceptable.
While property prices in the Cape continue to perform better than most other provinces in South Africa, they are still 20% off their peak in 2007. Often when sellers find that the offers they have been receiving reflect this then they enter a state of denial, blame the agent, the advertising or any other factor and refuse to drop below the original asking price.
This tends to leave the property on the market for six to twelve months, after which it is probably below market value due to a certain stigma that it may have picked up. Buyers are generally suspicious of homes that have been on the market for so long, assuming that there is some hidden fault that prevents them from selling.
The right time to drop your asking price is the moment you realize that the price is not going to be accepted. Once you do this, it is highly likely that some of the original potential buyers will regain interest in the property. While it can be emotionally upsetting for a seller to reduce the price on a home when he or she has spent time and money lavishing it with care, buyers are in the best position that they have been for nine years, so it is really no use trying to buck the trend – it almost never works.
The total number of homes on the market has fallen by 20% and the time taken to sell a property is now between twelve and fifteen weeks, which is nearly twice as long as in 2007. Rawson also doesn’t see the situation changing any time soon, although the Reserve Bank’s decision not to raise interest rates seems to have stabilized the market somewhat and probably signals the end of the downturn.
The veteran goes on to say that now is a great time to buy, despite the difficulties in obtaining bond finance. Property is still a top line investment and this has never been truer than in today’s tight market conditions. Consumers have grown overly cautious and negative in the current market climate and its time to dispel these reactions.
Rawson Properties, which has just over 140 franchises across the country, has recovered from a low in May/June to record a 250% increase in sales in September. However, Bill Rawson concedes that this trend is by no means universal and that his company is possibly unique in this aspect. Many smaller agencies are still going under and agents are dwindling, with the national figure down to 55 000 from 85 000.
With the latest political developments, interest may well be likely to decline, but there are questions being raised about the direction the new political leadership will take and exactly how ‘fairness to all’ will play out in terms of the dispensation. So far, it seems to have been handled quite well.
An encouraging sign is that South Africans seem to be more accepting of the new price structures in the property market, which often involves scaling down. Rawson has seen an increase in large deposits recently (up to 30% of the sale price), which also reflects that buyers are scaling down.
Rawson adds that, “Ongoing branding and marketing, with an increased emphasis on sophisticated customer related IT systems, ongoing support for franchisees with training, advice and encouragement and upgrading all of the support systems (again, particularly those that are IT related) are the factors that are taking the Rawson group forward”.
Find property in South Africa.
Tuesday, October 7, 2008
FNB Urges Consumers to be Cautious
Some Encouraging Signs but Beware
A press office feature released by FNB indicates that the risks to property have shifted from interest rates to economic growth and that consumers should heed this latest development. The FNB Property Barometer for the third quarter of 2008 was released on Monday and showed further weakening in levels of demand activity experienced by estate agents.
From a previous level of 4.4 on a scale of 1 to 10 in the second quarter, respondents to the survey indicated a further decline to an average level of activity recorded at 4.1, which is the lowest in the history of the barometer. The average length of time a property stays on the market has also increased from 14 weeks and 6 days to 20 weeks and 1 day in the most recent quarter.
Just 12% of the market comprised first time buyers, which is the lowest percentage on record, while sellers not obtaining their asking price increased from 85% in the previous quarter to 88%. The buy to let sector of the market is also relatively subdued, with a mere 13% of total buyers believed to be buy to let investors.
John Loos, FNB Home Loans Property Strategist, says that looking forward there have been some encouraging signs emerging, which reflect well on the future of the residential market. Most notably, the recent fall in oil prices, which has resulted in domestic fuel price cuts, as well as a softening in global food price inflation. FNB believes that the CPIX inflation rate may well be at its peak.
The onset of an expected decline in inflation would result in inflation having less of an impact on disposable income going forward, while interest rate cuts are anticipated from April 2009. The debt to disposable income ration in the household sector has also started to fall, which suggests that there is some improvement in the ability to service its debt burden.
However, in light of all the encouragement, Loos warns that consumers should not get too excited just yet. The current threat to global economic growth coming out of the US seems to be moving in to replace the previous risks. Loos says that it would be naïve to think that South Africa’s property market and financial sector are not exposed to the potential fallout from the US.
While the bailout plan is currently being implemented by the US government, it still remains to be seen as to how severely the recovery plan is regulated and how strict lending policies to households in the US become in a bid to restore responsible lending practices. The combination of tight lending criteria and falling house prices could have a profound impact on already-low consumer confidence in the US and subsequently on economic growth in the world’s biggest economy.
South Africa is by no means immune to the recessionary conditions and financial strain that may emanate as a result of the current crisis in the US. That being said, FNB’s most likely scenario appears to be one where domestic growth is slower, but remains positive. This would ultimately lead to a recovery in the demand for residential property from next year, as interest rates begin to decline.
South African consumers would do well not to ignore the current global growth risks when making investments going forward. If the crisis in the US gets significantly worse then the local property market will by no means escape unscathed. Loos suggests taking caution with regard to spending and borrowing practices until such time as we have more reliable indications of where the crisis stands. Despite some encouraging inflation and interest rates signs, South Africa is far from being out of the dark just yet.
This information is courtesy of John Loos (“Risks to property shift from interest rates to economic growth – ignore at your peril”, ITInews, 6 October 2008).
Property for sale in South Africa.
A press office feature released by FNB indicates that the risks to property have shifted from interest rates to economic growth and that consumers should heed this latest development. The FNB Property Barometer for the third quarter of 2008 was released on Monday and showed further weakening in levels of demand activity experienced by estate agents.
From a previous level of 4.4 on a scale of 1 to 10 in the second quarter, respondents to the survey indicated a further decline to an average level of activity recorded at 4.1, which is the lowest in the history of the barometer. The average length of time a property stays on the market has also increased from 14 weeks and 6 days to 20 weeks and 1 day in the most recent quarter.
Just 12% of the market comprised first time buyers, which is the lowest percentage on record, while sellers not obtaining their asking price increased from 85% in the previous quarter to 88%. The buy to let sector of the market is also relatively subdued, with a mere 13% of total buyers believed to be buy to let investors.
John Loos, FNB Home Loans Property Strategist, says that looking forward there have been some encouraging signs emerging, which reflect well on the future of the residential market. Most notably, the recent fall in oil prices, which has resulted in domestic fuel price cuts, as well as a softening in global food price inflation. FNB believes that the CPIX inflation rate may well be at its peak.
The onset of an expected decline in inflation would result in inflation having less of an impact on disposable income going forward, while interest rate cuts are anticipated from April 2009. The debt to disposable income ration in the household sector has also started to fall, which suggests that there is some improvement in the ability to service its debt burden.
However, in light of all the encouragement, Loos warns that consumers should not get too excited just yet. The current threat to global economic growth coming out of the US seems to be moving in to replace the previous risks. Loos says that it would be naïve to think that South Africa’s property market and financial sector are not exposed to the potential fallout from the US.
While the bailout plan is currently being implemented by the US government, it still remains to be seen as to how severely the recovery plan is regulated and how strict lending policies to households in the US become in a bid to restore responsible lending practices. The combination of tight lending criteria and falling house prices could have a profound impact on already-low consumer confidence in the US and subsequently on economic growth in the world’s biggest economy.
South Africa is by no means immune to the recessionary conditions and financial strain that may emanate as a result of the current crisis in the US. That being said, FNB’s most likely scenario appears to be one where domestic growth is slower, but remains positive. This would ultimately lead to a recovery in the demand for residential property from next year, as interest rates begin to decline.
South African consumers would do well not to ignore the current global growth risks when making investments going forward. If the crisis in the US gets significantly worse then the local property market will by no means escape unscathed. Loos suggests taking caution with regard to spending and borrowing practices until such time as we have more reliable indications of where the crisis stands. Despite some encouraging inflation and interest rates signs, South Africa is far from being out of the dark just yet.
This information is courtesy of John Loos (“Risks to property shift from interest rates to economic growth – ignore at your peril”, ITInews, 6 October 2008).
Property for sale in South Africa.
Monday, October 6, 2008
Bid to Professionalize Real Estate Industry in South Africa
IEASA Calls on Estate Agents
The South African Institute of Estate Agents (IEASA) has called on all real estate agents practicing in the country to join the institute. This is in a bid to increase the professionalism and responsibility of estate agents in the industry.
By becoming a member of the Institute of Estate Agents (or an MIEA), the agent will be assuring buyers and sellers of a degree of training and qualifications specific to their field. The members are also registered to practice as estate agents and have access to the institute’s widespread support network and services.
IEASA national president, Dr Willie Marais spoke at a recent conference and said, “The Estate Agency Affairs Board has made it plain that it wishes real estate to be regarded as a profession and just an amorphous industry. But that would presuppose that every agent belonged to a professional association – as doctors, lawyers and engineers do. And IEASA is currently the only organization recognized to fulfill that role. Consequently, the time is coming when agents who wish to be recognized as professionals will have to belong to IEASA – and those who don’t will be beyond the pale”.
Currently, only one out of every six estate agents working in South Africa are members of the institute. As the property industry evolves, training is without a doubt a cornerstone for agents who want to make a success out of their business. Dr Marais indicated that it is vital for those who are really serious about the industry to become better educated about all aspects of what their work entails.
IEASA has taken the lead when it comes to ensuring that all of its members are well informed and kept up to date on the terms and developments of property law and its affiliated practices. So if you are an agent practicing in South Africa then perhaps you should consider becoming a member of a professional institution like IEASA.
The information in this article is courtesy of HomesGoFast (“A Call to South Africa Real Estate Agents”, 6 October 2008).
South Africa property for sale.
The South African Institute of Estate Agents (IEASA) has called on all real estate agents practicing in the country to join the institute. This is in a bid to increase the professionalism and responsibility of estate agents in the industry.
By becoming a member of the Institute of Estate Agents (or an MIEA), the agent will be assuring buyers and sellers of a degree of training and qualifications specific to their field. The members are also registered to practice as estate agents and have access to the institute’s widespread support network and services.
IEASA national president, Dr Willie Marais spoke at a recent conference and said, “The Estate Agency Affairs Board has made it plain that it wishes real estate to be regarded as a profession and just an amorphous industry. But that would presuppose that every agent belonged to a professional association – as doctors, lawyers and engineers do. And IEASA is currently the only organization recognized to fulfill that role. Consequently, the time is coming when agents who wish to be recognized as professionals will have to belong to IEASA – and those who don’t will be beyond the pale”.
Currently, only one out of every six estate agents working in South Africa are members of the institute. As the property industry evolves, training is without a doubt a cornerstone for agents who want to make a success out of their business. Dr Marais indicated that it is vital for those who are really serious about the industry to become better educated about all aspects of what their work entails.
IEASA has taken the lead when it comes to ensuring that all of its members are well informed and kept up to date on the terms and developments of property law and its affiliated practices. So if you are an agent practicing in South Africa then perhaps you should consider becoming a member of a professional institution like IEASA.
The information in this article is courtesy of HomesGoFast (“A Call to South Africa Real Estate Agents”, 6 October 2008).
South Africa property for sale.
Thursday, October 2, 2008
House Prices Up in September
Some Life in Property Market
A recent article published by Reuters discusses South African house prices, indicating an increase of 3.6 percent year-on-year in September. This is the first increase in 10 months, reflecting fresh activity in the ailing market after an extremely difficult year.
Standard Bank’s property gauge released on a monthly basis showed an increase in the median house price at R580 000. The five month moving average is still in negative terrain, but has improved year-on-year to –5.5 percent after several months of steadily falling prices.
After sharp declines in May and June, Standard Bank said that the rate of decline slowed in July and August, but indicated that the property sector would remain under pressure until consumer spending starts to recover from its cooling period.
The bank said in a statement that, “The unexpected 3.6 percent increase in September is not seen as a new trend, but rather the result of volatile monthly data. It is anticipated that the index will once again show low or negative growth in the months to come. Nonetheless, the latest data show that there is some life in the property market”.
Household budgets have taken a beating with the enforcement of stricter lending laws and a series of interest rate increases, which has in turn put the housing sector under strain. The central bank increased the repo lending rate by 5 percentage points to 12 percent between June 2006 and June 2008 in a bid to fight inflation.
This house price increase coincides with a slowing in the upward rates cycle in August and market experts predict that the next move in interest rates will be down sometime in 2009. Slowing household spending is evident in falling retail and new vehicle sales and the bank believes that the sector may not recover until this picks up again and interest rates start falling.
“Residential property will remain in the doldrums until such time that fundamental drivers of the market turn for the better and that may be some time off,” according to Standard Bank.
The information in this article is courtesy of Reuters Africa (“S.Africa house prices up, but problems remain”, 2 October 2008).
Buy property in South Africa.
A recent article published by Reuters discusses South African house prices, indicating an increase of 3.6 percent year-on-year in September. This is the first increase in 10 months, reflecting fresh activity in the ailing market after an extremely difficult year.
Standard Bank’s property gauge released on a monthly basis showed an increase in the median house price at R580 000. The five month moving average is still in negative terrain, but has improved year-on-year to –5.5 percent after several months of steadily falling prices.
After sharp declines in May and June, Standard Bank said that the rate of decline slowed in July and August, but indicated that the property sector would remain under pressure until consumer spending starts to recover from its cooling period.
The bank said in a statement that, “The unexpected 3.6 percent increase in September is not seen as a new trend, but rather the result of volatile monthly data. It is anticipated that the index will once again show low or negative growth in the months to come. Nonetheless, the latest data show that there is some life in the property market”.
Household budgets have taken a beating with the enforcement of stricter lending laws and a series of interest rate increases, which has in turn put the housing sector under strain. The central bank increased the repo lending rate by 5 percentage points to 12 percent between June 2006 and June 2008 in a bid to fight inflation.
This house price increase coincides with a slowing in the upward rates cycle in August and market experts predict that the next move in interest rates will be down sometime in 2009. Slowing household spending is evident in falling retail and new vehicle sales and the bank believes that the sector may not recover until this picks up again and interest rates start falling.
“Residential property will remain in the doldrums until such time that fundamental drivers of the market turn for the better and that may be some time off,” according to Standard Bank.
The information in this article is courtesy of Reuters Africa (“S.Africa house prices up, but problems remain”, 2 October 2008).
Buy property in South Africa.
Property Still Not Up to Scratch in SA
FNB has recently indicated that expected job losses are bound to put more pressure on the ailing South African property market. Statistics show that real house prices have dropped by nearly 10% and that a lack of affordability continues to work as a handbrake to the market.
The September FNB House Price Index was released this week and figures showed a slight year-on-year increase at 1.8%, but prices month-on-month are declining at –0.1%. Taking inflation into account, residential property values plummeted by an incredible 9.5%.
This year has seen South African consumers take a beating, with rising interest rates and skyrocketing food and fuel prices. The banks have also tightened their grip on available credit as a result of the National Credit Act, which came into force last year. This has caused a significant drop in the demand for property, as potential buyers struggle to find funding.
Estate agents have reported a dramatic decline in sales volumes and in many instances at least half of what they were in early 2007. There has been an exodus of agents from the market, with the estimate that at least 20 000 are no longer in business compared to the same time last year.
Add to the mix a surplus of sellers, thanks to political uncertainty and government incompetence around Eskom and other issues inspiring a wave of emigration and you have at the very least a buyers’ market, but also something close to a recession in that sector of the economy.
General economic growth has proven disappointing as well, which has led to a shedding of jobs – another development that FNB indicates is not good for the residential property sector. However, FNB property strategist John Loos says that when affordability is measured in terms of average house price/average income, it appears to be improving, but “the catch is that the improvement in affordability refers to those who remain employed throughout the economic downturn”.
Loos went on to say that the economy “may already be at a stage of net job losses in the formal sector and this situation will partly offset any possible improvement in interest in the residential property asset class, as a result of improving affordability for regular income earners”.
“In short, given a slowing economic growth rate and slow real household disposable income growth for the household sector as a whole, we are not necessarily at the stage where an increasing number of people can afford the average priced house,” Loos said. The recent shocks in the stock market led the downturn, but areas in the lower price range may now be deteriorating faster.
Paul Beadle, managing director of Just Money, said that the current financial crisis playing out around the globe affects South African consumers in that the bottom line is there is less money to go around. “This affects businesses that are now struggling because their stock value has fallen or because the cannot find the additional investment they need to grow. It also means that many banks are unwilling to lend cash because of the greater risks now involved”.
Beadle also said that South African banks are “actually in good shape because they had limited exposure to the credit problems in the US that caused this crisis”. Nevertheless, investors on the global market are extremely wary of risk, so they are going to be cautious when it comes to investing in emerging markets like SA.
This lack of inward investment could have a profound impact on growth and profits of companies in South Africa, which is on top of the ongoing economic concerns and the high cost of living putting more pressure on consumers, said Beadle.
There are some estate agents who report a slight increase in show day visits and sales in recent months. According to Jeanne van Jarsveldt of the RE/MAX Group, “The past three months has seen a steady market recovery and has been the best we have seen on a national level during 2008”.
Loos warned that “early signs of improving household fundamentals are not believed to be sufficient to turn the market around” and that this is anticipated around April next year when the first interest rate cut is expected.
The information in this article is courtesy of Realestateweb (“Property prices: still looking ugly”, 1 October 2008).
South Africa property for sale.
The September FNB House Price Index was released this week and figures showed a slight year-on-year increase at 1.8%, but prices month-on-month are declining at –0.1%. Taking inflation into account, residential property values plummeted by an incredible 9.5%.
This year has seen South African consumers take a beating, with rising interest rates and skyrocketing food and fuel prices. The banks have also tightened their grip on available credit as a result of the National Credit Act, which came into force last year. This has caused a significant drop in the demand for property, as potential buyers struggle to find funding.
Estate agents have reported a dramatic decline in sales volumes and in many instances at least half of what they were in early 2007. There has been an exodus of agents from the market, with the estimate that at least 20 000 are no longer in business compared to the same time last year.
Add to the mix a surplus of sellers, thanks to political uncertainty and government incompetence around Eskom and other issues inspiring a wave of emigration and you have at the very least a buyers’ market, but also something close to a recession in that sector of the economy.
General economic growth has proven disappointing as well, which has led to a shedding of jobs – another development that FNB indicates is not good for the residential property sector. However, FNB property strategist John Loos says that when affordability is measured in terms of average house price/average income, it appears to be improving, but “the catch is that the improvement in affordability refers to those who remain employed throughout the economic downturn”.
Loos went on to say that the economy “may already be at a stage of net job losses in the formal sector and this situation will partly offset any possible improvement in interest in the residential property asset class, as a result of improving affordability for regular income earners”.
“In short, given a slowing economic growth rate and slow real household disposable income growth for the household sector as a whole, we are not necessarily at the stage where an increasing number of people can afford the average priced house,” Loos said. The recent shocks in the stock market led the downturn, but areas in the lower price range may now be deteriorating faster.
Paul Beadle, managing director of Just Money, said that the current financial crisis playing out around the globe affects South African consumers in that the bottom line is there is less money to go around. “This affects businesses that are now struggling because their stock value has fallen or because the cannot find the additional investment they need to grow. It also means that many banks are unwilling to lend cash because of the greater risks now involved”.
Beadle also said that South African banks are “actually in good shape because they had limited exposure to the credit problems in the US that caused this crisis”. Nevertheless, investors on the global market are extremely wary of risk, so they are going to be cautious when it comes to investing in emerging markets like SA.
This lack of inward investment could have a profound impact on growth and profits of companies in South Africa, which is on top of the ongoing economic concerns and the high cost of living putting more pressure on consumers, said Beadle.
There are some estate agents who report a slight increase in show day visits and sales in recent months. According to Jeanne van Jarsveldt of the RE/MAX Group, “The past three months has seen a steady market recovery and has been the best we have seen on a national level during 2008”.
Loos warned that “early signs of improving household fundamentals are not believed to be sufficient to turn the market around” and that this is anticipated around April next year when the first interest rate cut is expected.
The information in this article is courtesy of Realestateweb (“Property prices: still looking ugly”, 1 October 2008).
South Africa property for sale.
Wednesday, October 1, 2008
Why You Need a Tax Number to Buy Property
What SARS Has to do With Property
When it comes to buying your first home, there are a number of things required by various parties that can prove extremely complicated. For instance, the transferring attorneys will ask for your tax number. Now many of you might like to know what on earth SARS has to do with buying property.
The answer is simple: any transfer of immovable property in South Africa gives rise to the payment of transfer duty, which is levied under the Transfer Duty Act. The property cannot be transferred into your name until the transfer duty has been paid or a declaration has been submitted citing that the transaction is exempt. The latter involves purchases by public benefit organizations or property transactions where VAT is charged.
As well as the receipt for transfer duty, the seller needs to fill out a declaration (Form TD1), as does the buyer (Form TD2). The information that is required on these declaration forms includes the income tax numbers of the buyer, seller and estate agent (where applicable).
This can create a problem where the tax compliance records of any party are not up to scratch, which is yet another weapon that SARS has in its armoury. Transfers of property have been known to be put on hold in cases where any one of the parties has not complied with their tax obligations.
Most property transactions have to be registered at the Deeds Office and this cannot take place without a transfer duty receipt or exemption certificate from SARS. However, registration is not necessary where fixed property is registered in the name of a trust, company or close corporation and there is merely a change in beneficiaries, shareholders or members.
SARS thus requires estate agents who are party to such transactions to complete a declaration (Form TD7). This is necessary because the change of ownership here does not require registration of the transfer in the Deeds Office, since technically the ownership of the property itself has not changed. These transactions are still subject to transfer duty however, and in the past many buyers have managed to avoid paying transfer duty by failing to declare the purchase of these shares to SARS.
The information in this article is courtesy of Steven Jones (“Why Sars wants your income tax number when you buy a property”, MoneywebTax, 30 September 2008).
Find property to buy in South Africa.
When it comes to buying your first home, there are a number of things required by various parties that can prove extremely complicated. For instance, the transferring attorneys will ask for your tax number. Now many of you might like to know what on earth SARS has to do with buying property.
The answer is simple: any transfer of immovable property in South Africa gives rise to the payment of transfer duty, which is levied under the Transfer Duty Act. The property cannot be transferred into your name until the transfer duty has been paid or a declaration has been submitted citing that the transaction is exempt. The latter involves purchases by public benefit organizations or property transactions where VAT is charged.
As well as the receipt for transfer duty, the seller needs to fill out a declaration (Form TD1), as does the buyer (Form TD2). The information that is required on these declaration forms includes the income tax numbers of the buyer, seller and estate agent (where applicable).
This can create a problem where the tax compliance records of any party are not up to scratch, which is yet another weapon that SARS has in its armoury. Transfers of property have been known to be put on hold in cases where any one of the parties has not complied with their tax obligations.
Most property transactions have to be registered at the Deeds Office and this cannot take place without a transfer duty receipt or exemption certificate from SARS. However, registration is not necessary where fixed property is registered in the name of a trust, company or close corporation and there is merely a change in beneficiaries, shareholders or members.
SARS thus requires estate agents who are party to such transactions to complete a declaration (Form TD7). This is necessary because the change of ownership here does not require registration of the transfer in the Deeds Office, since technically the ownership of the property itself has not changed. These transactions are still subject to transfer duty however, and in the past many buyers have managed to avoid paying transfer duty by failing to declare the purchase of these shares to SARS.
The information in this article is courtesy of Steven Jones (“Why Sars wants your income tax number when you buy a property”, MoneywebTax, 30 September 2008).
Find property to buy in South Africa.
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