There is one recession-proof property investment in South Africa that experts swear by – student accommodation.
According to Berry Everitt of Chas Everitt International, the demand for rental units near campuses is growing as student numbers increase year-on-year. Everitt stated that universities are struggling to build additional student residences which means that student are relying on the private sector for housing.
To secure your investment, Everitt said that rent for student accommodation per square meter is higher than residential units. To find a student tenant is also easier with many institutions compiling free property listings, which are distributed at the end of each academic year.
Everitt advised that one should look to invest in property close to the campus, as rates are higher in these areas. At the moment Pretoria, Johannesburg and Witwatersrand are showing growth with Potchefstoom also pointing to potential. Everitt advised to keep an eye out for Pietermaritzburg where numbers are expected to grow.
However, Everitt warned, investors need to carefully select property that needs little or no maintenance. Look for robust surfaces that are easy to replace and implement a breakage cost paid by the tenants.
Use December summer holiday to do maintenance in and around the property for most students will not use the accommodation then.
(This article is courtesy of IOL)
Rent property in South Africa
Monday, December 29, 2008
Tuesday, December 23, 2008
Cape Town Voted Best World City
Cape Town has been voted ‘Best World City’ in the 2008 Telegraph Awards. This spectacular destination was voted above major cities like San Francisco and Sydney to walk away with the honours. If that’s not enough South Africa also claimed a place in the top three in the ‘Best Non-European Country’ category.
From the 40 000 people that were used in the poll, 92% said that the credit crunch will have no effect on holiday destination choices. Among the top destination on earth were New Zealand, Australia, South Africa and Canada. Alongside Cape Town were San Francisco, Sydney and Vancouver in the top cities category.
Cape Town’s top tourist attractions include Table Mountain, the V&A Waterfront, Robben Island, the Cape Winelands and Kirstenbosch Botanical Gardens.
Cape Town was also recently voted one of ten cities in the world that are most likely to become a global sustainability centre by 2020.
The same awards saw Singapore Airlines, Virgin, Emirates and Qatar Airways walk away with the people’s favourite airlines.
Buy property in Cape Town
From the 40 000 people that were used in the poll, 92% said that the credit crunch will have no effect on holiday destination choices. Among the top destination on earth were New Zealand, Australia, South Africa and Canada. Alongside Cape Town were San Francisco, Sydney and Vancouver in the top cities category.
Cape Town’s top tourist attractions include Table Mountain, the V&A Waterfront, Robben Island, the Cape Winelands and Kirstenbosch Botanical Gardens.
Cape Town was also recently voted one of ten cities in the world that are most likely to become a global sustainability centre by 2020.
The same awards saw Singapore Airlines, Virgin, Emirates and Qatar Airways walk away with the people’s favourite airlines.
Buy property in Cape Town
Auctioneer Timid About 2009
This article is courtesy of Realestateweb (2009: Auctioneer gazes into his crystal ball – 22 December 2008)
Rael Levitt, CEO of the Alliance Group warns that global events will continue to have a huge impact on the distressed South African economy in 2009.
Levitt says that The Alliance Group, South Africa’s largest asset services and auction group, has experienced a turbulent 2008 with the property market going into free fall from the middle of the year. This started with a sharp increase in car repossessions and then house repossessions. Personal insolvencies followed which left Levitt’s company with large volumes of these distressed markets.
“By the end of the year we saw liquidations following and this December there have been more liquidations of companies than since the turbulent mid-1990s".
Levitt explained that what we are seeing know in South Africa is six months behind the USA, UK and Europe where distress is moving from the retail environment in business. Also following in the global trend is the property market, with a flood of residential stock hitting the market with both forced and non-forced sellers’ values dropping across the board.
Levitt said that by the end of this year, mortgage stress (less than two months in arrears) has grown to over 100 000 and severe mortgage stress (being four months in arrears) has also spiked to over 30 000 home owners. He added that for this to slow down, the Reserve Bank have to slash the interest rates by more than 4% at the start of 2009.
Commercial property, according to him has not been hit that hard even though the banks have tightened up on new finance criterion, which has dampened the demand. Sellers of commercial property prefer a “hold position” rather than discounting their prices. Levitt believes without a doubt that cost inflation will cause an upward pressure on prices and rentals. With rentals increasing as a result of supply constraints, plus lower interest rates, many opportunistic buyers will emerge.
Liquidations have increase sharply with the weakening rand impacting local businesses and both domestic and foreign investor sentiment. This can be seen in the large numbers of liquidations and business closures in November and December. Levitt warns that importers, motor trade, building suppliers and contractors can expect a rough 2009.
However, Levitt still believes that the 2010 Soccer World Cup will improve sentiment in certain sectors. He concluded by saying that those investors who understand the market cycles and who has access to finance, will be the ones who have a once in a decade opportunity to accumulate assets and businesses at fantastic values.
Buy property in South Africa
Rael Levitt, CEO of the Alliance Group warns that global events will continue to have a huge impact on the distressed South African economy in 2009.
Levitt says that The Alliance Group, South Africa’s largest asset services and auction group, has experienced a turbulent 2008 with the property market going into free fall from the middle of the year. This started with a sharp increase in car repossessions and then house repossessions. Personal insolvencies followed which left Levitt’s company with large volumes of these distressed markets.
“By the end of the year we saw liquidations following and this December there have been more liquidations of companies than since the turbulent mid-1990s".
Levitt explained that what we are seeing know in South Africa is six months behind the USA, UK and Europe where distress is moving from the retail environment in business. Also following in the global trend is the property market, with a flood of residential stock hitting the market with both forced and non-forced sellers’ values dropping across the board.
Levitt said that by the end of this year, mortgage stress (less than two months in arrears) has grown to over 100 000 and severe mortgage stress (being four months in arrears) has also spiked to over 30 000 home owners. He added that for this to slow down, the Reserve Bank have to slash the interest rates by more than 4% at the start of 2009.
Commercial property, according to him has not been hit that hard even though the banks have tightened up on new finance criterion, which has dampened the demand. Sellers of commercial property prefer a “hold position” rather than discounting their prices. Levitt believes without a doubt that cost inflation will cause an upward pressure on prices and rentals. With rentals increasing as a result of supply constraints, plus lower interest rates, many opportunistic buyers will emerge.
Liquidations have increase sharply with the weakening rand impacting local businesses and both domestic and foreign investor sentiment. This can be seen in the large numbers of liquidations and business closures in November and December. Levitt warns that importers, motor trade, building suppliers and contractors can expect a rough 2009.
However, Levitt still believes that the 2010 Soccer World Cup will improve sentiment in certain sectors. He concluded by saying that those investors who understand the market cycles and who has access to finance, will be the ones who have a once in a decade opportunity to accumulate assets and businesses at fantastic values.
Buy property in South Africa
Sunday, December 21, 2008
The Year Ahead: What to Expect
The information in this article is courtesy of Realestateweb (Fasten your seatbelts: it’s another rough property ride – 22 December 2009)
After a difficult year, the property market is set for another bumpy ride according to experts. Sure with the interest rate finally dropping a bit we might feel pessimistic but will this really make a difference in the year ahead.
There are some things we can take into consideration including that banks have tightened up on lending criteria to the point where home loan providers are rejecting about one in two buyers. At the moment there is no sign that this is going to change soon.
The amount of buyers has drastically falling due to harsher economic conditions. With less and less people considering buying or selling houses, estate agency will have a hard time keeping their heads above water.
Property prices have fallen and some are saying that it might not be the bottom yet, and while buyers are sitting on the sideline waiting for property prices to reach the bottom, agency are having a hard time surviving. These buyers are also waiting for expected interest rate drops, meaning that they might get a bigger home loan in 6 months’ time.
The unstable political scene will also have its effect on the property market in 2009. The 2009 elections in South Africa might bring some necessary relieve, but will also mean that buyers will sit on the sideline and wait before they enter the market. With our government yet to resolve the problems in Zimbabwe, we might also see more sellers that buyers. This is bad news because the property market has an excess stock as it is – particularly in the R2 million plus range.
If you are, however feeling optimistic about South Africa’s future there is not better time than now to invest. You are likely to pick up excellent bargains with great potential should things start looking up again.
Look for property in South Africa
After a difficult year, the property market is set for another bumpy ride according to experts. Sure with the interest rate finally dropping a bit we might feel pessimistic but will this really make a difference in the year ahead.
There are some things we can take into consideration including that banks have tightened up on lending criteria to the point where home loan providers are rejecting about one in two buyers. At the moment there is no sign that this is going to change soon.
The amount of buyers has drastically falling due to harsher economic conditions. With less and less people considering buying or selling houses, estate agency will have a hard time keeping their heads above water.
Property prices have fallen and some are saying that it might not be the bottom yet, and while buyers are sitting on the sideline waiting for property prices to reach the bottom, agency are having a hard time surviving. These buyers are also waiting for expected interest rate drops, meaning that they might get a bigger home loan in 6 months’ time.
The unstable political scene will also have its effect on the property market in 2009. The 2009 elections in South Africa might bring some necessary relieve, but will also mean that buyers will sit on the sideline and wait before they enter the market. With our government yet to resolve the problems in Zimbabwe, we might also see more sellers that buyers. This is bad news because the property market has an excess stock as it is – particularly in the R2 million plus range.
If you are, however feeling optimistic about South Africa’s future there is not better time than now to invest. You are likely to pick up excellent bargains with great potential should things start looking up again.
Look for property in South Africa
Wednesday, December 17, 2008
Currency Trend Can Bail Out SA Market
PropertyWire, a global property news service, reported that the real estate market in South Africa is experiencing the toughest conditions most people can remember. However, they do predict that the currency fluctuations could help recover the struggling market.
Samual Seeff, chairman of the Seeff property group, is known for selling the country’s most expensive property earlier this year. Seeff says that volumes are down and times are tough. He added that even the top end of the market is quietened down.
Like other agencies, Seeff is not expecting a good summer but is rather focusing on surviving the slump.
Berry Everitt, MD of Chas Everitt International, is more optimistic. He reckons that interest from foreign property investors could be a trend that can help the property market. He added that there is a “mood of optimism sweeping through the global market” in the wake of the US election outcome and is generating renewed interest in South African real estate.
Everitt’s prediction is that European buyers in particular would once again see the properties in South Africa as a good investment, and the weakness of the rand against their currencies will help this on. In addition, he said, the South African market is in good shape and likely to recover faster than other markets.
Everitt says that the foreign interest can already be seen in the “substantially higher” number of inquiries they have received from foreigners.
Everitt concluded by saying that these buyers are not necessarily interested in any property but rather more expensive, lifestyle properties.
Invest in property in South Africa
Samual Seeff, chairman of the Seeff property group, is known for selling the country’s most expensive property earlier this year. Seeff says that volumes are down and times are tough. He added that even the top end of the market is quietened down.
Like other agencies, Seeff is not expecting a good summer but is rather focusing on surviving the slump.
Berry Everitt, MD of Chas Everitt International, is more optimistic. He reckons that interest from foreign property investors could be a trend that can help the property market. He added that there is a “mood of optimism sweeping through the global market” in the wake of the US election outcome and is generating renewed interest in South African real estate.
Everitt’s prediction is that European buyers in particular would once again see the properties in South Africa as a good investment, and the weakness of the rand against their currencies will help this on. In addition, he said, the South African market is in good shape and likely to recover faster than other markets.
Everitt says that the foreign interest can already be seen in the “substantially higher” number of inquiries they have received from foreigners.
Everitt concluded by saying that these buyers are not necessarily interested in any property but rather more expensive, lifestyle properties.
Invest in property in South Africa
Tuesday, December 16, 2008
Pros and Cons of Owning Holiday Homes
(Information in this article is courtesy of Realestateweb (Holiday homes: The pros and cons – 19 November 2007)
While on holiday this year, some might become so bedazzled by the local scenery that they might decide to buy property in a holiday destination. Real estate agents in these areas are already gearing up for, what might be a busy season for them.
If you look at the advantages of owning a holiday home, flat of apartment you’ll see that having an investment like a holiday home, it might earn you some income on the long run or even open the door for rental income.
Absa recently pointed out that a holiday homes, apartment or even vacant land can also serve as a collateral for other debt.
If you are buying with the financial help of a bank you have take in consideration that this might put a lot of strain on your income. If you want to use the property occasionally, you are going to have to rely on short-term tenants like holiday rentals. Expect to do most of the marketing for this yourself, seeing that there is a shortage of short-term rental agents in South Africa.
There is also the possibility of the interest rates rising, in which case you will have to pay more for your holiday haven. Another big expense might be cleaning and maintaining your property in between visitors’ stays.
Other disadvantages include higher maintenance cost because of the proximity to the coast, as well as the fact that sea or mountain views are not preserved and can impact your property’s value. In tough market conditions you might find it hard to sell you property.
There are, however, a lot of advantages to owning a holiday home; if you do your sums carefully and make wise decisions you will reap the rewards. If you are not planning to use the property often and not planning to rent it out, it might be smarter to invest in a different kind of property all together.
But property for sale in South Africa
While on holiday this year, some might become so bedazzled by the local scenery that they might decide to buy property in a holiday destination. Real estate agents in these areas are already gearing up for, what might be a busy season for them.
If you look at the advantages of owning a holiday home, flat of apartment you’ll see that having an investment like a holiday home, it might earn you some income on the long run or even open the door for rental income.
Absa recently pointed out that a holiday homes, apartment or even vacant land can also serve as a collateral for other debt.
If you are buying with the financial help of a bank you have take in consideration that this might put a lot of strain on your income. If you want to use the property occasionally, you are going to have to rely on short-term tenants like holiday rentals. Expect to do most of the marketing for this yourself, seeing that there is a shortage of short-term rental agents in South Africa.
There is also the possibility of the interest rates rising, in which case you will have to pay more for your holiday haven. Another big expense might be cleaning and maintaining your property in between visitors’ stays.
Other disadvantages include higher maintenance cost because of the proximity to the coast, as well as the fact that sea or mountain views are not preserved and can impact your property’s value. In tough market conditions you might find it hard to sell you property.
There are, however, a lot of advantages to owning a holiday home; if you do your sums carefully and make wise decisions you will reap the rewards. If you are not planning to use the property often and not planning to rent it out, it might be smarter to invest in a different kind of property all together.
But property for sale in South Africa
Thursday, December 11, 2008
Rate Cut: What Do the Experts Say
This article is courtesy of Realestateweb (Tito’s Tonic: Too little, Too Late – 12 December 2008)
Yesterday South Africans heard that the repo rate was cut by half a percent. This announcement by Tito Mboweni is said to pave the way for lower interest rates from commercial banks and even further cuts next year. But the question on everyone’s lips is, is this enough. The cut will not make a major difference to individuals’ debt repayments and would not influence the property market anytime soon, according to analysts.
The repo rate – the key monetary policy interest rate – now stands at 11,5%, which will lower the prime mortgages rates offered by banks to 15%. Nedbank has already announced that they would be cutting the rate for their customers.
This is the first time the repo rate has been lowered in two-and-a half years. Since June 2006, interest rates have been climbing steadily and the extra 5% ramped up home loans repayments by more than 30%. The economy has taken a huge blow and many have lost their jobs and possessions because of this.
John Loos, property strategist for FNB’s home loans’ division said that the cut implies a decline in prime rate instalment repayment of about R185 on a R500 000 (20 years) and about R371 on a R1m bond (20years). Even though this is not much it is believed to be the start of a series of cuts that are expected to end about 3,5% lower - to about 12%.
Jacques Du Toit, senior property analyst with Absa Homeloans said: “Against the background of current and expected economic conditions, especially with regard to inflation, interest rates are forecast to be cut further during the course of 2009.
He added that the outlook for the residential property market towards the end of 2009 remains depressed. A noticeable improvement is expected in 2010.
According to Neil Gopal, CEO of the South African Property Owners’ Association we require more cuts to really see the effects. He added that it takes about 2 years for interest rates to take effect. This means the hikes of last year are still being felt now.
"I don't think consumer spending will improve in the short term and we should see some recovery in the retail sector in the second half of next year. We need more government spending on infrastructure projects to ensure jobs in the construction sector are maintained."
Brain Falconer, CEO of Colliers International Residential, is more positive about the cuts and Samual Seeff, chairman of Seeff Properties agrees but says that only a 3-4% cut would have a positive effect on the market. He added that the real estate market would continue to suffer if the banks aren’t willing to lend money more freely.
Dr Andrew Golding, CEO of Pam Golding Properties says that it will take a while for the rate cut to influence the market and hopes for a more substantial cut. Hershel Jawitz agrees and said that there are great buying opportunities out there and can’t be taken advantage of due to the banks’ strict lending criteria.
But property in South Africa
Yesterday South Africans heard that the repo rate was cut by half a percent. This announcement by Tito Mboweni is said to pave the way for lower interest rates from commercial banks and even further cuts next year. But the question on everyone’s lips is, is this enough. The cut will not make a major difference to individuals’ debt repayments and would not influence the property market anytime soon, according to analysts.
The repo rate – the key monetary policy interest rate – now stands at 11,5%, which will lower the prime mortgages rates offered by banks to 15%. Nedbank has already announced that they would be cutting the rate for their customers.
This is the first time the repo rate has been lowered in two-and-a half years. Since June 2006, interest rates have been climbing steadily and the extra 5% ramped up home loans repayments by more than 30%. The economy has taken a huge blow and many have lost their jobs and possessions because of this.
John Loos, property strategist for FNB’s home loans’ division said that the cut implies a decline in prime rate instalment repayment of about R185 on a R500 000 (20 years) and about R371 on a R1m bond (20years). Even though this is not much it is believed to be the start of a series of cuts that are expected to end about 3,5% lower - to about 12%.
Jacques Du Toit, senior property analyst with Absa Homeloans said: “Against the background of current and expected economic conditions, especially with regard to inflation, interest rates are forecast to be cut further during the course of 2009.
He added that the outlook for the residential property market towards the end of 2009 remains depressed. A noticeable improvement is expected in 2010.
According to Neil Gopal, CEO of the South African Property Owners’ Association we require more cuts to really see the effects. He added that it takes about 2 years for interest rates to take effect. This means the hikes of last year are still being felt now.
"I don't think consumer spending will improve in the short term and we should see some recovery in the retail sector in the second half of next year. We need more government spending on infrastructure projects to ensure jobs in the construction sector are maintained."
Brain Falconer, CEO of Colliers International Residential, is more positive about the cuts and Samual Seeff, chairman of Seeff Properties agrees but says that only a 3-4% cut would have a positive effect on the market. He added that the real estate market would continue to suffer if the banks aren’t willing to lend money more freely.
Dr Andrew Golding, CEO of Pam Golding Properties says that it will take a while for the rate cut to influence the market and hopes for a more substantial cut. Hershel Jawitz agrees and said that there are great buying opportunities out there and can’t be taken advantage of due to the banks’ strict lending criteria.
But property in South Africa
Wednesday, December 10, 2008
Fewer Tenants are Paying on Time
The Times reports that there have been a significant drop in the number of rental tenants who are paying in full and on time. This is according to TNP, a registered credit bureau and developer of the industry’s first rental payment profile in South Africa.
TNP’s database shows that 54% of tenants were able to meet their rental commitments for the third quarter, compare to previous figures of 70%. These shocking numbers comes as a huge shock since the rental industry has seen a recent average rental drop of 2%.
According to Michelle Dickens, managing director of TNP, the 16% drop in on-time payments reflects the current economical situation and how it is affecting tenants.
Another shocking figure was released by the National Credit Regulator showing that there are 17.14 million active credit consumers, of whom 38.44% are in bad standing.
Dickens further added that the most worrying fact is that 12% of tenants are not able to meet their rental demand at all and are defaulting on their full rental payment. Dickens explained that it is important to remember that affordability is not measured by earnings alone but rather earning less expenses.
TNP’s database combines information and other sources to provide the most comprehensive behavioural profiles on tenants and prospective buyers in the property industry.
Rent property in South Africa
TNP’s database shows that 54% of tenants were able to meet their rental commitments for the third quarter, compare to previous figures of 70%. These shocking numbers comes as a huge shock since the rental industry has seen a recent average rental drop of 2%.
According to Michelle Dickens, managing director of TNP, the 16% drop in on-time payments reflects the current economical situation and how it is affecting tenants.
Another shocking figure was released by the National Credit Regulator showing that there are 17.14 million active credit consumers, of whom 38.44% are in bad standing.
Dickens further added that the most worrying fact is that 12% of tenants are not able to meet their rental demand at all and are defaulting on their full rental payment. Dickens explained that it is important to remember that affordability is not measured by earnings alone but rather earning less expenses.
TNP’s database combines information and other sources to provide the most comprehensive behavioural profiles on tenants and prospective buyers in the property industry.
Rent property in South Africa
Tuesday, December 9, 2008
SA Property: Market: What Lies Ahead
The information in this article is courtesy of BetterBond (The road to recovery - December 2008)
With everyone’s eyes fixed on 2010 and the world cup, some may have forgotten about 2009. Many economists are predicting the tough market conditions will continue well into next year even though the first rate cut is expected in December 2008. Developing economies such as South Africa will continue to suffer the impact of the global recession, which means 2009 starts with local markets already on the back foot.
Deon Lessing, marketing director of Betterbond says: “Starting on the long road to recovery, 2009 will still be a tough year for consumers and those in the property industry. Economists predict consumer spending may be at its weakest point in the first half of next year. As interest rates begin to decline, sentiment should start to improve. But in short - a debt riddled society will still be the issue. Interest rates are expected to be cut by at least 300 basis points by the end of 2009, but it will take time to filter through to the market. The banks are still adhering to strict lending criteria, so obtaining mortgages will only be for those with a good payment profile, with a deposit and who can demonstrate affordability.”
According to Jacques du Toit, ABSA senior property analyst, the nominal house price growth is expected to be between 3% to 4% in the 2008-2009 period, while in real terms house prices are set to decline next year.
“The decline in house prices will bring about buying opportunities for investors looking to expand their buy-to-rent portfolio. There will be many property deals available to buyers who have a deposit and clean payment profile or enough money to buy a property with cash. With banks asking for higher deposits and only 50% of bond submissions approved, it will be people with money that will be in the driving seat in 2009. The global recession has also led to the opportunity for South African investors to buy property in countries like the UK, where housing prices have also dropped significantly,” says Lessing.
With continued tough economic conditions, where will bond originators be focusing their efforts? “Our goal next year will be to secure relationships with our partners, the estate agents and the banks. It will be important to acquire the maximum amount of business from agents by ensuring that we can obtain bonds for their clients. No deal is too big or too small. The only way this can be done is for us to be 100% aligned with the lending practises of the banks,” says Lessing.
He says it will be vital for property professionals to also get back to basics, as this is no time for frills. In the past, great market conditions made us complacent, which in turn meant is was more difficult to adapt to the changing market conditions during 2008. We now have our ducks in a row and are ready for 2009 and all the opportunities it will bring.
“2009 is the year to keep it simple and where possible keep expenses down by cutting short-term debt. Property is a medium to long-term investment and if consumers can afford to take advantage of the market downturn, now would be a great time to do it,” Lessing concludes.
Browse through property for rent in South Africa
With everyone’s eyes fixed on 2010 and the world cup, some may have forgotten about 2009. Many economists are predicting the tough market conditions will continue well into next year even though the first rate cut is expected in December 2008. Developing economies such as South Africa will continue to suffer the impact of the global recession, which means 2009 starts with local markets already on the back foot.
Deon Lessing, marketing director of Betterbond says: “Starting on the long road to recovery, 2009 will still be a tough year for consumers and those in the property industry. Economists predict consumer spending may be at its weakest point in the first half of next year. As interest rates begin to decline, sentiment should start to improve. But in short - a debt riddled society will still be the issue. Interest rates are expected to be cut by at least 300 basis points by the end of 2009, but it will take time to filter through to the market. The banks are still adhering to strict lending criteria, so obtaining mortgages will only be for those with a good payment profile, with a deposit and who can demonstrate affordability.”
According to Jacques du Toit, ABSA senior property analyst, the nominal house price growth is expected to be between 3% to 4% in the 2008-2009 period, while in real terms house prices are set to decline next year.
“The decline in house prices will bring about buying opportunities for investors looking to expand their buy-to-rent portfolio. There will be many property deals available to buyers who have a deposit and clean payment profile or enough money to buy a property with cash. With banks asking for higher deposits and only 50% of bond submissions approved, it will be people with money that will be in the driving seat in 2009. The global recession has also led to the opportunity for South African investors to buy property in countries like the UK, where housing prices have also dropped significantly,” says Lessing.
With continued tough economic conditions, where will bond originators be focusing their efforts? “Our goal next year will be to secure relationships with our partners, the estate agents and the banks. It will be important to acquire the maximum amount of business from agents by ensuring that we can obtain bonds for their clients. No deal is too big or too small. The only way this can be done is for us to be 100% aligned with the lending practises of the banks,” says Lessing.
He says it will be vital for property professionals to also get back to basics, as this is no time for frills. In the past, great market conditions made us complacent, which in turn meant is was more difficult to adapt to the changing market conditions during 2008. We now have our ducks in a row and are ready for 2009 and all the opportunities it will bring.
“2009 is the year to keep it simple and where possible keep expenses down by cutting short-term debt. Property is a medium to long-term investment and if consumers can afford to take advantage of the market downturn, now would be a great time to do it,” Lessing concludes.
Browse through property for rent in South Africa
Monday, December 8, 2008
Experts Predict Rise in House Prices
(The information in this article is courtesy of PropertyWire (South African Property Market Might Be Reaching Temporary Bottom – 8 December 2008)
At the moment property sales in South Africa have ground to a halt but the good news is that experts predict that when the market starts to recover, prices could rise to more than 50% in 3 years.
Bargain prices are to be expected over the next 3 months and some suggest that there may not be a better time to buy than now. Chas Everitt International’s spokesperson, Barry Everitt suggests that you make money when you buy property, not when you sell. He added that there is no better time to buy than the present, especially with the forecast of property prices rising by 50 to 60 percent in 3 years.
Rising sales activity since August indicates that there is an increasing demand, which will intensify when interest rates start to fall next year. According to Everitt this will lead to stock levels falling and prices will start to rise. At this point there will be a window of opportunity to negotiate the best deals.
Chas Everitt International’s report also indicates that the best buys are likely to be in the medium-price, medium-size sector of the market where price growth is currently at its lowest ebb.
Everitt concluded by saying that these homes are likely to experience the highest level of demand when the economy turns and many middle-class families who are currently making do in rented accommodation of smaller homes can once again qualify for home loans and start looking for homes of their own or upgrades.
Buy property in South Africa
At the moment property sales in South Africa have ground to a halt but the good news is that experts predict that when the market starts to recover, prices could rise to more than 50% in 3 years.
Bargain prices are to be expected over the next 3 months and some suggest that there may not be a better time to buy than now. Chas Everitt International’s spokesperson, Barry Everitt suggests that you make money when you buy property, not when you sell. He added that there is no better time to buy than the present, especially with the forecast of property prices rising by 50 to 60 percent in 3 years.
Rising sales activity since August indicates that there is an increasing demand, which will intensify when interest rates start to fall next year. According to Everitt this will lead to stock levels falling and prices will start to rise. At this point there will be a window of opportunity to negotiate the best deals.
Chas Everitt International’s report also indicates that the best buys are likely to be in the medium-price, medium-size sector of the market where price growth is currently at its lowest ebb.
Everitt concluded by saying that these homes are likely to experience the highest level of demand when the economy turns and many middle-class families who are currently making do in rented accommodation of smaller homes can once again qualify for home loans and start looking for homes of their own or upgrades.
Buy property in South Africa
Sunday, December 7, 2008
House Prices are Going Down - Absa
The information in this article is courtesy of Realestateweb (It’s official: House prices are going backwards – 8 December 2008)
Absa – who has been monitoring house prices since the 1960’s – has spilled the beans by saying that the average house in now worth less than a month ago. They released the shocking figures on Friday, which states that the average house in South Africa cost about R963 500 in November. This is about 0.1% less than in October.
Another figure shows that real house prices, which take into account the effect inflation has on purchasing power, have dropped by more than 10% year-on-year.
More figures released by Absa indicates that small houses (below 141m²) declined by 0.3%; middle segment houses (141-220 m²) edged up slightly to R670 300 and large house prices ground to a halt and now stand at an average of R 1 381 100.
According to Absa’s senior property analyst, John Loos, the outlook for the property market remains depressed for the first half of 2009. He added that this year houses are expected to have increased in value by 4% overall, but the forecast for next year is for houses to drop on average by at least 3%.
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Absa – who has been monitoring house prices since the 1960’s – has spilled the beans by saying that the average house in now worth less than a month ago. They released the shocking figures on Friday, which states that the average house in South Africa cost about R963 500 in November. This is about 0.1% less than in October.
Another figure shows that real house prices, which take into account the effect inflation has on purchasing power, have dropped by more than 10% year-on-year.
More figures released by Absa indicates that small houses (below 141m²) declined by 0.3%; middle segment houses (141-220 m²) edged up slightly to R670 300 and large house prices ground to a halt and now stand at an average of R 1 381 100.
According to Absa’s senior property analyst, John Loos, the outlook for the property market remains depressed for the first half of 2009. He added that this year houses are expected to have increased in value by 4% overall, but the forecast for next year is for houses to drop on average by at least 3%.
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Thursday, December 4, 2008
Building Contracts: What You Should Know
The information in this article is courtesy of Realestateweb (Bad Builders: What to do? – 5 December 2008)
According to Luthando Vutula, managing executive of Absa Home Loans, it is absolutely essential that you check all references before you sign a contract with any builder, as banks do not protect clients from unprincipled builders. These builders often rip off their clients by not completing houses or by building poor quality and sub-standard houses.
Vutula advises that clients should ensure that they fully understand the content of the building contract before employing the services of builders. If you, as the client, are not completely satisfied with the standard of quality of the work, you should speak to directly to the builder of developer. If you can’t reach an agreement with the builder you can contact you bank and instruct them to make no further payment on the building until the work has been done to your satisfaction.
Vutula explained that the bank is not party to the building contract and one should contact the National Home Builders Regulatory Council (NHBRC) if you encounter any disputes between you and the builder. Although the bank cannot recommend builders to its clients, the legislation stipulates that all builders involved with building projects that are subject to a mortgage loan should be registered with the NHBRC. You can also get information on registered builders from the NHBRC.
Vutula further advised that clients should obtain legal advice for clarity on the terms and conditions of the contract to avoid any unpleasantness. He added that when a client applies for a loan on building works on their property, the bank appoints a valuer who does checks on the construction or building site to ensure work is being carried out in accordance with the minimum building requirements and plans submitted to the bank.
According to Vutula the clients has the right to withhold payment from the builder but should first familiarise themselves with the contract and where they stand regarding withholding funds.
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According to Luthando Vutula, managing executive of Absa Home Loans, it is absolutely essential that you check all references before you sign a contract with any builder, as banks do not protect clients from unprincipled builders. These builders often rip off their clients by not completing houses or by building poor quality and sub-standard houses.
Vutula advises that clients should ensure that they fully understand the content of the building contract before employing the services of builders. If you, as the client, are not completely satisfied with the standard of quality of the work, you should speak to directly to the builder of developer. If you can’t reach an agreement with the builder you can contact you bank and instruct them to make no further payment on the building until the work has been done to your satisfaction.
Vutula explained that the bank is not party to the building contract and one should contact the National Home Builders Regulatory Council (NHBRC) if you encounter any disputes between you and the builder. Although the bank cannot recommend builders to its clients, the legislation stipulates that all builders involved with building projects that are subject to a mortgage loan should be registered with the NHBRC. You can also get information on registered builders from the NHBRC.
Vutula further advised that clients should obtain legal advice for clarity on the terms and conditions of the contract to avoid any unpleasantness. He added that when a client applies for a loan on building works on their property, the bank appoints a valuer who does checks on the construction or building site to ensure work is being carried out in accordance with the minimum building requirements and plans submitted to the bank.
According to Vutula the clients has the right to withhold payment from the builder but should first familiarise themselves with the contract and where they stand regarding withholding funds.
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Wednesday, December 3, 2008
Top Agency Closes Two Offices
The information in this article is courtesy of Realestateweb (Jawitz retreats in Cape Town – 3 December 2008)
The tough market has yet again force an agency to close it doors and this time it’s one of the top estate agency brands. Jawitz Properties, which is well established in Gauteng, recently closed two of its offices in Cape Town – Jawitz Hout Bay and Goodwood.
According to the CEO, Herschel Jawitz, this was a tough business decision and he added that even though these offices closed, the agency still has a strong presence in Milnerton and surroundings. Jawitz Properties also has offices in Blouberg, Sea Point, Pinelands, the City Bowl and Hermanus.
Jawitz said that the Hout Bay office was closed because of sales date, which showed that the area averaged around 10 to 12 sales a month. Also, the volume of sales is down by about 50% with April, May and June down around 70% year-on-year. This means that there were about 60-70 agents fighting for around 10 sales in this suburb. This has caused the number of agents to fall dramatically – from an estimated 150 estate agents.
In Goodwood, a lower-income area, buyers have been under a lot of pressure. At a price of R600 000 to R700 000 you have to pay 5% deposit (around R50 000) plus costs.
Jawitz said that no agencies have been spared and the tough times have become even worse with the pie shrinking dramatically. However, he said, his company still has plans to expand in the Western Cape and elsewhere. He is positive about the future and stressed that the competition in the political arena, lower inflation and an interest rate cut could turn things around.
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The tough market has yet again force an agency to close it doors and this time it’s one of the top estate agency brands. Jawitz Properties, which is well established in Gauteng, recently closed two of its offices in Cape Town – Jawitz Hout Bay and Goodwood.
According to the CEO, Herschel Jawitz, this was a tough business decision and he added that even though these offices closed, the agency still has a strong presence in Milnerton and surroundings. Jawitz Properties also has offices in Blouberg, Sea Point, Pinelands, the City Bowl and Hermanus.
Jawitz said that the Hout Bay office was closed because of sales date, which showed that the area averaged around 10 to 12 sales a month. Also, the volume of sales is down by about 50% with April, May and June down around 70% year-on-year. This means that there were about 60-70 agents fighting for around 10 sales in this suburb. This has caused the number of agents to fall dramatically – from an estimated 150 estate agents.
In Goodwood, a lower-income area, buyers have been under a lot of pressure. At a price of R600 000 to R700 000 you have to pay 5% deposit (around R50 000) plus costs.
Jawitz said that no agencies have been spared and the tough times have become even worse with the pie shrinking dramatically. However, he said, his company still has plans to expand in the Western Cape and elsewhere. He is positive about the future and stressed that the competition in the political arena, lower inflation and an interest rate cut could turn things around.
Find property for sale in South Africa
Monday, December 1, 2008
Paying your dues - Property Tax
The information in this article is courtesy of BetterBond
Once again it is that time of year when everyone is frantically filing their tax returns and for most this is fairly easy process. But what are the tax implications of selling or owning a property?
Deon Lessing, marketing director of Bettterbond says: “Many sellers may be worried about paying a Capital Gains Tax, however there is an exclusion of a gain of up to R1 500 000 on a primary residence. This means that any home sold for a capital profit of that amount or less will not be subject to a Capital Gains Tax.”
So how is a primary residence defined? A primary residence is one used mainly for domestic purposes that you both own in your personal capacity and live in on a permanent basis. Inclusive of the land the property is situated on an unconsolidated adjacent land, the residence must not exceed two hectares.
“If the property is in the name of a company, close corporation or trust, the exclusion will not apply as the owner is then not classified as a natural person and the property will not be used as a primary residence. The seller would have to pay the capital gains tax upon registration of the property into the purchaser’s name,” adds Lessing.
Johan van Heerden of Dykes van Heerden Inc, advises: “It is of utmost importance for the purchaser to establish before the agreement is entered into, whether the seller is registered for VAT or not.”
With regards to purchasing a residential property, as a general rule in South Africa, a purchaser will pay transfer duty on a sliding scale to the Receiver of Revenue. However, should the seller be registered for VAT, the purchase price will be inclusive of VAT, unless specifically excluded in the contract. If the property that is being purchased is of a commercial or business nature and purchaser is registered for VAT, then the purchaser will be able to claim the VAT back from the Receiver of Revenue after registration. However, sales of residential immovable property do not attract VAT, due to the fact that the sellers are not registered for VAT. This situation is of course different should a buyer purchase a property from a developer who is registered for VAT, and as such, no transfer duty is payable as the seller is registered for VAT.
With current market conditions and increase in demand for rental property, many investors are buying property to let out. If a property is purchased as a buy-to-rent investment, the tax levied for the letting of residential property falls under the normal ambits of income tax.
A proposal has been included in the new Revenue Laws Amendment bill, issued 1 August 2008, which calls to revamp the allowance applied to taxpayers renting out residential housing units. The proposal relates to housing units let out by a taxpayer, or that are occupied by the full-time employees of the taxpayer. Currently there is a write off of 12% for the first year and then a write off of 2% per year for the next 44 years. The proposal aims to change this to a standard rate of 5% over a 20 year period.
If a residential property has been bought for business use, there is no difference to how the property is taxed except if the property is zoned as a business. If this is the case, the Property Rates Bill could effect how the municipality determines the amount of tax charged. It is best to phone the municipality for rates being charged in the area you wish to purchase.
SARS has made tax returns far simpler to fill out and submit. However, if there are areas you are unsure of it is best to use a tax consultant or contact an attorney. Visit www.dykesvanheerden.co.za for more information on property tax and transfers.
***The information contained in this press release provides general guidance. It is not intended to constitute substantive information and cannot replace the specific advice which should be sought from an appropriate professional advisor in relation to the actual facts of a matter, before taking any particular course of action.
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Once again it is that time of year when everyone is frantically filing their tax returns and for most this is fairly easy process. But what are the tax implications of selling or owning a property?
Deon Lessing, marketing director of Bettterbond says: “Many sellers may be worried about paying a Capital Gains Tax, however there is an exclusion of a gain of up to R1 500 000 on a primary residence. This means that any home sold for a capital profit of that amount or less will not be subject to a Capital Gains Tax.”
So how is a primary residence defined? A primary residence is one used mainly for domestic purposes that you both own in your personal capacity and live in on a permanent basis. Inclusive of the land the property is situated on an unconsolidated adjacent land, the residence must not exceed two hectares.
“If the property is in the name of a company, close corporation or trust, the exclusion will not apply as the owner is then not classified as a natural person and the property will not be used as a primary residence. The seller would have to pay the capital gains tax upon registration of the property into the purchaser’s name,” adds Lessing.
Johan van Heerden of Dykes van Heerden Inc, advises: “It is of utmost importance for the purchaser to establish before the agreement is entered into, whether the seller is registered for VAT or not.”
With regards to purchasing a residential property, as a general rule in South Africa, a purchaser will pay transfer duty on a sliding scale to the Receiver of Revenue. However, should the seller be registered for VAT, the purchase price will be inclusive of VAT, unless specifically excluded in the contract. If the property that is being purchased is of a commercial or business nature and purchaser is registered for VAT, then the purchaser will be able to claim the VAT back from the Receiver of Revenue after registration. However, sales of residential immovable property do not attract VAT, due to the fact that the sellers are not registered for VAT. This situation is of course different should a buyer purchase a property from a developer who is registered for VAT, and as such, no transfer duty is payable as the seller is registered for VAT.
With current market conditions and increase in demand for rental property, many investors are buying property to let out. If a property is purchased as a buy-to-rent investment, the tax levied for the letting of residential property falls under the normal ambits of income tax.
A proposal has been included in the new Revenue Laws Amendment bill, issued 1 August 2008, which calls to revamp the allowance applied to taxpayers renting out residential housing units. The proposal relates to housing units let out by a taxpayer, or that are occupied by the full-time employees of the taxpayer. Currently there is a write off of 12% for the first year and then a write off of 2% per year for the next 44 years. The proposal aims to change this to a standard rate of 5% over a 20 year period.
If a residential property has been bought for business use, there is no difference to how the property is taxed except if the property is zoned as a business. If this is the case, the Property Rates Bill could effect how the municipality determines the amount of tax charged. It is best to phone the municipality for rates being charged in the area you wish to purchase.
SARS has made tax returns far simpler to fill out and submit. However, if there are areas you are unsure of it is best to use a tax consultant or contact an attorney. Visit www.dykesvanheerden.co.za for more information on property tax and transfers.
***The information contained in this press release provides general guidance. It is not intended to constitute substantive information and cannot replace the specific advice which should be sought from an appropriate professional advisor in relation to the actual facts of a matter, before taking any particular course of action.
Find property in South Africa
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