Latest Stats on Market Crash
Realestateweb has published yet another article detailing the grim situation still being experienced in the South African property market, this time revealing the latest figures from RE/MAX of Southern Africa, the biggest residential real estate sales group in the industry.
The figures provide telling insight into what has been happening in the residential property market this year. The statistics were compiled by RE/MAX of Southern Africa and BetterBond and reflect the residential property buying transactions and property market performance as compared to the same period in 2007.
Sales transactions: 2008 vs 2007
According to the stats, there has been a year-on-year decrease of 38% in the amount of property sales transactions nationally (across all price brackets) between January to July 2008, compared to the same period in 2007.
The total amount of properties under R499 000 sold this year is 36% less than the same time in 2007. Overall, the number of sales transactions has dropped by 42% year-on-year for properties priced between R500 000 and R749 000. There has been a decrease of 39% for properties in the R750 000 to R999 999 price bracket and a drop of 33% for properties valued at R1m to R1,499 999.
When it comes to the higher price brackets, the biggest decrease was recorded in the R1,5 to R2,5m price bracket, where the total properties sold so far this year is nearly 50% less than the same time last year. In sales of properties over the R2,5m mark, there has been a drop of 44%.
Most Active Price Brackets
In light of the total national transactions conducted by buyers and property investors between January and July this year, the most active property price bracket with figures recorded at 43% is that of R499 999 or less. This was followed by 25% for properties priced between R500 000 and R749 000, 15% for those priced between R750 000 and R999 999, 12% for homes in the R1m to R1,499 999 region, 4% for properties valued at R1,5m to R2,5m and 1% for homes priced anywhere above R2,5m.
Regional Stats
The total number of national sales transactions in the R499 999 or less price bracket in the months from January to July, the metropolitan regions recorded the following stats: 29% for Gauteng, Limpopo, Mpumalanga and North West; 22% for the Western Cape; 18% for KwaZulu Natal; 9% for the Eastern Cape and 2% for the Freestate. The remaining 20% refers to property sales in the non-metropolitan or rural areas across all nine provinces.
In the category regarding sales valued between R500 000 to R749 999: Gauteng, Limpopo, Mpumalanga and North West recorded the highest total of 41%, with KwaZulu Natal coming in behind on 20%, the Western Cape at 18%, 4% for the Eastern Cape and just 2% in the Freestate. 13% was recorded for sales activity that took place in the non-metropolitan and rural areas throughout the nine provinces.
When it comes to properties priced between R750 000 and R999 999: Gauteng, Limpopo, Mpumalanga and North West recorded the leading figure of 39%, followed by the Western Cape at 23%, 19% in KwaZulu Natal, the Eastern Cape at 6% and the Freestate tailing with 4%. The remaining 9% was recorded in the non-metropolitan and rural areas in the country’s nine provinces.
In the R1m to R1,499 999 price range, the highest percentage recorded was again in Gauteng, Limpopo, Mpumalanga and North West at 42%, with the Western Cape reaching 25%, KwaZulu Natal recording 17%, the Eastern Cape at 3% and the Freestate at just 1%. Sales in the non-metropolitan and rural areas came in at 12%.
The property price bracket between R1,5 and R2,5m had KwaZulu Natal in the lead taking 28% of all sales transactions, followed closely by the Western Cape on 27%, Gauteng, Limpopo, Mpumalanga and North West on 20%, the Eastern Cape fetching 4% and the Freestate again at 1%. The rest summed up to 14% of the total national sales activity.
The highest property price category of over R2,5m showed the Western Cape as having the largest amount of sales transactions at 36%, with KwaZulu Natal coming in second at 32%, Gauteng, Limpopo, Mpumalanga and North West with 20%, the Eastern Cape at 4% and the leftover in the non-metropolitan/rural areas in South Africa recording 8% of total sales.
There are signs of a slight market recovery in the near future and with the effect of higher interest rates, the acceleration of consumer inflation, as well as the strict lending criteria from all major financial institutions, this has highlighted that the single most important motivation for consumers is affordability and the ability to sustain their debt exposure.
The data discussed reflects a shift towards properties priced in the lower brackets, while premium properties in excess of R2,5m in the Western Cape remains in high demand across the country. During the course of August, RE/MAX of Southern Africa has noticed a definite revival in the property market, with many branches recording their highest number of property sales for any month this year.
There is one thing that comes out clearly in all of this, the way that lending institutions look at consumer risk and debt exposure has forever altered the landscape of the real estate market and both consumers, as well as agents need to learn how to adapt to the changing environment.
The information in this article is courtesy of Jeanne van Jarsveldt (“SA’s property market crash: grim new stats”, Realestateweb, 28 August 2008).
Find property for sale in South Africa.
Friday, August 29, 2008
Thursday, August 28, 2008
South African Property Owners Can Breathe Sigh of Relief
Land Reform Bill Put on Ice
There has been vigorous debate recently concerning the government’s proposed Land Bill aimed at speeding up the land reform program in South Africa. Farmers and citizens alike can breathe a huge sigh of relief at news that the parliamentary committee has shelved the legislation, citing lack of consultation as the reason behind the decision and has said that the Bill will be reintroduced at a later date.
The government has said that it wants to redistribute nearly a third of white-owned farm land by 2014. At the end of Apartheid, almost 90% of South African land was owned by whites, who made up just 10% of the overall population at the time. So far, the land reform program has only succeeded in transferring 4% of this land to blacks.
Critics of the proposed legislation have argued that it would be unconstitutional, as it would prevent people from going to court should their property be taken. In fact, there are those who have argued that the expropriation could extend beyond agricultural property to all types of property, be it intellectual, commercial or personal.
The Land Bill was introduced by the ANC government in April this year and aimed to give the government greater powers to transfer land and property from existing owners. A committee statement said: “The decision [to shelve the bill] was reached after consultation with various stakeholders both within and outside parliament and in the interest of broader consultation and effective public participation”.
The government’s land restitution program is focused on returning land seized by whites after 1913 to the disenfranchised black population. However, earlier this year it was determined that the program had failed in its mandate. Thousands of claims are still being processed across the country for land and property that was taken unlawfully from black owners during the Apartheid era and before.
Farmers and civil society may well be pleased with the government’s decision to put the legislation on hold, but the reality remains that land redistribution continues to be a problem that needs to be addressed in South Africa. The government may have been stalled at this point, but no doubt there will be new legislation to follow.
The information in this article is courtesy of BBC News (“S Africa land reform bill shelved”, 27 August 2008).
Property for sale in South Africa.
There has been vigorous debate recently concerning the government’s proposed Land Bill aimed at speeding up the land reform program in South Africa. Farmers and citizens alike can breathe a huge sigh of relief at news that the parliamentary committee has shelved the legislation, citing lack of consultation as the reason behind the decision and has said that the Bill will be reintroduced at a later date.
The government has said that it wants to redistribute nearly a third of white-owned farm land by 2014. At the end of Apartheid, almost 90% of South African land was owned by whites, who made up just 10% of the overall population at the time. So far, the land reform program has only succeeded in transferring 4% of this land to blacks.
Critics of the proposed legislation have argued that it would be unconstitutional, as it would prevent people from going to court should their property be taken. In fact, there are those who have argued that the expropriation could extend beyond agricultural property to all types of property, be it intellectual, commercial or personal.
The Land Bill was introduced by the ANC government in April this year and aimed to give the government greater powers to transfer land and property from existing owners. A committee statement said: “The decision [to shelve the bill] was reached after consultation with various stakeholders both within and outside parliament and in the interest of broader consultation and effective public participation”.
The government’s land restitution program is focused on returning land seized by whites after 1913 to the disenfranchised black population. However, earlier this year it was determined that the program had failed in its mandate. Thousands of claims are still being processed across the country for land and property that was taken unlawfully from black owners during the Apartheid era and before.
Farmers and civil society may well be pleased with the government’s decision to put the legislation on hold, but the reality remains that land redistribution continues to be a problem that needs to be addressed in South Africa. The government may have been stalled at this point, but no doubt there will be new legislation to follow.
The information in this article is courtesy of BBC News (“S Africa land reform bill shelved”, 27 August 2008).
Property for sale in South Africa.
Wednesday, August 27, 2008
SA Property Transfer Guide Paints a Positive Picture
Not All Doom and Gloom
The South African property market may be experiencing difficult times, but data released by the South African Property Transfer Guide (SAPTG) indicates that the situation is not quite as dim as some of the latest media reports might suggest. This is according to SAPTG National Training Manager, Dieter Deppisch, whose comments were recorded in an article published by iafrica.
Deppisch says, “It’s not all ‘doom and gloom’ across the entire real estate sector. While certain segments within specific areas in South Africa have experienced a fall in prices, there is reason to believe that trading conditions will become bullish in the short-term”. He acknowledges that the residential property market in general is experiencing a sharp downturn, but Deppisch argues that this is a perfectly natural part of the cycle. “The industry is going through what economists call a ‘correction in the marketplace’,” he explains.
The data available through SAPTG’s advanced online property reports has informed Deppisch’s insistence that it is primarily the middle segment of the residential market that is feeling the worst effects of the current downturn. “SAPTG data paints an accurate picture of what is happening nationally, regionally and all the way down to street level,” he says. “The lower economic end of the market is actually experiencing growth in both value and volume of sales. Similarly, there has also been a healthy increase in the value of sales at the very top end of the market, whilst this has been tempered by a decrease in volume in most areas”.
In his illustration of conditions at the lower end of the market, Deppisch uses the example of Gauteng’s Protea Glen. “If we compare the first seven months of 2007 with the same period this year, our data indicates that the suburb has experienced excellent growth,” he argues. “Excluding transfers valued at R100 000 or below, which may typically include RDP housing and deceased estates, the volume of transfers is up from 517 last year to 548 this year”.
In fact, the average house price in Protea Glen has risen by a healthy 19%, from R239 328 in 2007 to R285 000 this year. “The data clearly shows that this large suburb hasn’t been hit by the real estate recession and is, in fact, still experiencing healthy growth,” says Deppisch. This suburb falls into the Bond Battalions category in Clusterplus, Knowledge Factory’s reputable geo-demographic segmentation tool, which denotes this category as having suburbs made up largely of young parents weighed down by their families, bonds, rates and taxes, as well as the maintenance of a second hand family car.
The SAPTG data also reveals that some suburbs in the higher end of the market are also doing well. The Upper Crust and Pearl Strings categories of Clusterplus typically feature large homes with immaculate gardens, swimming pools and tennis courts, in leafy, older neighbourhoods. These have experienced a decrease in transfer volumes since last year, but not in value.
Examples include the Johannesburg suburbs of Sandown and Bryanston, where “Sandown has seen average transfer values increase by 17.2%, while the volume of sales has dropped by 28%. Similarly, average values have increased by a vigorous 31.2% in Bryanston, even though the suburb has experienced a 10.5% drop in the volume of sales,” says Deppisch.
When it comes to an indication of healthy growth in the top end of the market, there is one suburb in particular that stands out. Also in Gauteng, Sandhurst has reflected an amazing 49.1% increase in average transfer values and only a 10% drop in volume. Deppisch explains that buyers at the high end of the market are not typically affected by the tight lending criteria of the National Credit Act and include both local and foreign cash buyers.
With 15 years of comprehensive transfer information available through the SAPTG to back up his stance, Deppisch disagrees with the pessimistic claims made by various property analysts that property values have plummeted across the board. “What is true is that there are areas in the country where prices have fallen by 30 to 40% and even more,” he notes, “but the fall in property value has been largely confined to the middle sector of the residential market. In addition, it should be noted that at times the perceived ‘decrease’ is artificial, reflecting the difference between a seller’s unrealistic wish-price and actual market value or the difference between a ‘sellers cycle’ price compared with prices in the ‘buyers cycle’. At times, even estate agents are to blame since some offer an unrealistically inflated value to a prospective seller simply to acquire a sole mandate”.
Deppisch clarifies the middle segment as consisting of properties between 140m² and 220m² that have an average transfer value of R967 000 and admits that it has been “hit pretty hard”, with volumes down by as much as 35% nationally and real growth slightly below CPIX inflation calculated year on year. Despite this, he remains adamant that the future still looks promising, even for this segment of the market.
“There is light at the end of the tunnel, even for the middle segment,” he asserts. “Most analysts agree that inflation will peak by the first quarter of next year and that the first rate cuts can be expected before the end of 2009. What this means is that the current correction could well be over within 18 months and we will begin the cyclical shift from a buyers’ to a sellers’ market again”.
The information in this article is courtesy of Property iafrica (“Some boom amidst gloom”, 27 August 2008).
Find property for sale in South Africa.
The South African property market may be experiencing difficult times, but data released by the South African Property Transfer Guide (SAPTG) indicates that the situation is not quite as dim as some of the latest media reports might suggest. This is according to SAPTG National Training Manager, Dieter Deppisch, whose comments were recorded in an article published by iafrica.
Deppisch says, “It’s not all ‘doom and gloom’ across the entire real estate sector. While certain segments within specific areas in South Africa have experienced a fall in prices, there is reason to believe that trading conditions will become bullish in the short-term”. He acknowledges that the residential property market in general is experiencing a sharp downturn, but Deppisch argues that this is a perfectly natural part of the cycle. “The industry is going through what economists call a ‘correction in the marketplace’,” he explains.
The data available through SAPTG’s advanced online property reports has informed Deppisch’s insistence that it is primarily the middle segment of the residential market that is feeling the worst effects of the current downturn. “SAPTG data paints an accurate picture of what is happening nationally, regionally and all the way down to street level,” he says. “The lower economic end of the market is actually experiencing growth in both value and volume of sales. Similarly, there has also been a healthy increase in the value of sales at the very top end of the market, whilst this has been tempered by a decrease in volume in most areas”.
In his illustration of conditions at the lower end of the market, Deppisch uses the example of Gauteng’s Protea Glen. “If we compare the first seven months of 2007 with the same period this year, our data indicates that the suburb has experienced excellent growth,” he argues. “Excluding transfers valued at R100 000 or below, which may typically include RDP housing and deceased estates, the volume of transfers is up from 517 last year to 548 this year”.
In fact, the average house price in Protea Glen has risen by a healthy 19%, from R239 328 in 2007 to R285 000 this year. “The data clearly shows that this large suburb hasn’t been hit by the real estate recession and is, in fact, still experiencing healthy growth,” says Deppisch. This suburb falls into the Bond Battalions category in Clusterplus, Knowledge Factory’s reputable geo-demographic segmentation tool, which denotes this category as having suburbs made up largely of young parents weighed down by their families, bonds, rates and taxes, as well as the maintenance of a second hand family car.
The SAPTG data also reveals that some suburbs in the higher end of the market are also doing well. The Upper Crust and Pearl Strings categories of Clusterplus typically feature large homes with immaculate gardens, swimming pools and tennis courts, in leafy, older neighbourhoods. These have experienced a decrease in transfer volumes since last year, but not in value.
Examples include the Johannesburg suburbs of Sandown and Bryanston, where “Sandown has seen average transfer values increase by 17.2%, while the volume of sales has dropped by 28%. Similarly, average values have increased by a vigorous 31.2% in Bryanston, even though the suburb has experienced a 10.5% drop in the volume of sales,” says Deppisch.
When it comes to an indication of healthy growth in the top end of the market, there is one suburb in particular that stands out. Also in Gauteng, Sandhurst has reflected an amazing 49.1% increase in average transfer values and only a 10% drop in volume. Deppisch explains that buyers at the high end of the market are not typically affected by the tight lending criteria of the National Credit Act and include both local and foreign cash buyers.
With 15 years of comprehensive transfer information available through the SAPTG to back up his stance, Deppisch disagrees with the pessimistic claims made by various property analysts that property values have plummeted across the board. “What is true is that there are areas in the country where prices have fallen by 30 to 40% and even more,” he notes, “but the fall in property value has been largely confined to the middle sector of the residential market. In addition, it should be noted that at times the perceived ‘decrease’ is artificial, reflecting the difference between a seller’s unrealistic wish-price and actual market value or the difference between a ‘sellers cycle’ price compared with prices in the ‘buyers cycle’. At times, even estate agents are to blame since some offer an unrealistically inflated value to a prospective seller simply to acquire a sole mandate”.
Deppisch clarifies the middle segment as consisting of properties between 140m² and 220m² that have an average transfer value of R967 000 and admits that it has been “hit pretty hard”, with volumes down by as much as 35% nationally and real growth slightly below CPIX inflation calculated year on year. Despite this, he remains adamant that the future still looks promising, even for this segment of the market.
“There is light at the end of the tunnel, even for the middle segment,” he asserts. “Most analysts agree that inflation will peak by the first quarter of next year and that the first rate cuts can be expected before the end of 2009. What this means is that the current correction could well be over within 18 months and we will begin the cyclical shift from a buyers’ to a sellers’ market again”.
The information in this article is courtesy of Property iafrica (“Some boom amidst gloom”, 27 August 2008).
Find property for sale in South Africa.
Monday, August 25, 2008
Rental Stocks Depleting Fast
Rentals in High Demand - ERA
A Business Report article has drawn attention to the intensifying conditions in the current property market with the demand for rental properties in South Africa literally going through the roof. This is becoming increasingly problematic, as the stocks are proving to be in limited supply.
ERA chief executive, Gerhard Kotze said that this is the broad consensus from a range of group offices around the country. He indicates that although the high interest rates and current inability to afford homes or obtain home loans are the biggest factors driving the rental market, there are also an increasing number of property owners who are opting to downsize to smaller rental accommodation and letting out their own homes to stay afloat financially.
Kotze says, “Infrastructure developments such as those for Eskom and the minerals and precious metals boom, as well as pockets of strong regional development are also creating demand for rental properties”.
According to Helene Visser of ERA Steer Blaauwberg, encompassing the Table View area, her region has had a “very active” rental market of late with a reasonable supply of long-term rental stock and some attractive rental bargains. “But there is also a strong demand for short term rentals and a shortage of furnished rental accommodation. Rentals at the lower end are around R3500 a month and at the higher end around R6500 a month,” she says.
In the East London area, Penny Lindstrom from ERA Sun Beacon Bay says that townhouses are in short supply and thus fetch a premium rental, while ERA Brakpan’s Monica van Tonder says that there is only rental stock available because various new developments are nearing completion.
At ERA Ermelo, Retha de Beer has an enormous rental portfolio, as the mining sector and Eskom’s current expansion in the area are fuelling the demand for townhouses and homes for rent. “Much of the demand is coming from senior management and technical people seconded to these projects,” she says, “and two-bedroom townhouses are renting for around R3300 a month”.
Lucille Kaplan of ERA Pretoria East reports that in Tshwane, there has been a definite increase in rental demand across the board, with prices ranging from R3800 a month to an incredible R25000 a month in some cases.
The information in this article is courtesy of Business Report (“Rental stocks drying up, says ERA”, 25 August 2008).
Property for sale in South Africa.
A Business Report article has drawn attention to the intensifying conditions in the current property market with the demand for rental properties in South Africa literally going through the roof. This is becoming increasingly problematic, as the stocks are proving to be in limited supply.
ERA chief executive, Gerhard Kotze said that this is the broad consensus from a range of group offices around the country. He indicates that although the high interest rates and current inability to afford homes or obtain home loans are the biggest factors driving the rental market, there are also an increasing number of property owners who are opting to downsize to smaller rental accommodation and letting out their own homes to stay afloat financially.
Kotze says, “Infrastructure developments such as those for Eskom and the minerals and precious metals boom, as well as pockets of strong regional development are also creating demand for rental properties”.
According to Helene Visser of ERA Steer Blaauwberg, encompassing the Table View area, her region has had a “very active” rental market of late with a reasonable supply of long-term rental stock and some attractive rental bargains. “But there is also a strong demand for short term rentals and a shortage of furnished rental accommodation. Rentals at the lower end are around R3500 a month and at the higher end around R6500 a month,” she says.
In the East London area, Penny Lindstrom from ERA Sun Beacon Bay says that townhouses are in short supply and thus fetch a premium rental, while ERA Brakpan’s Monica van Tonder says that there is only rental stock available because various new developments are nearing completion.
At ERA Ermelo, Retha de Beer has an enormous rental portfolio, as the mining sector and Eskom’s current expansion in the area are fuelling the demand for townhouses and homes for rent. “Much of the demand is coming from senior management and technical people seconded to these projects,” she says, “and two-bedroom townhouses are renting for around R3300 a month”.
Lucille Kaplan of ERA Pretoria East reports that in Tshwane, there has been a definite increase in rental demand across the board, with prices ranging from R3800 a month to an incredible R25000 a month in some cases.
The information in this article is courtesy of Business Report (“Rental stocks drying up, says ERA”, 25 August 2008).
Property for sale in South Africa.
Property Myths Exposed - To Buy or Rent?
Should You Rent or Buy?
In the current property market climate, investors are understandably shy and there are many potential buyers who are choosing to rent and rather bide their time until the market improves. However, there are experts who believe that the property market is set to hit rock bottom in the coming months and this is in fact the ideal time to make that investment.
In an article for Realestateweb, Jackie Cameron asks the question, “Is it really better to be a landlord than a tenant?” This was inspired by an American article called ‘Rent vs Buy Myths that Ruined the Housing Market’, which discussed some of the so-called myths that made people justify buying houses that they probably could not afford during the property boom in the US.
Myth 1: Renting is like throwing your money away.
Those who believe that renting is the way forward seem to think that buyers pay money to the bank for the first 5 years for the privilege of borrowing money. In contrast, renters pay for one thing each month: shelter – they don’t pay interest, tax and other property-related costs.
Myth 2: It doesn’t cost more to buy than it does to rent.
Those who decide to rent pay a deposit, while those who own spend loads of money on the initial costs, with the home needing to appreciate in value considerably before these costs become insignificant, is the argument here.
Myth 3: Buyers have assets; renters do not.
Those in favour of renting say that while they may not co-own a home with a lender, this doesn’t mean that they don’t have assets. In fact, they have extra cash to pay for these other assets.
Myth 4: Houses are a good investment.
There are some renters who believe that housing is “not an investment” and that although home prices can rise, the rate of appreciation on housing does not extend beyond inflation levels. The American article cites an annual real return on US housing gauged between 1890 and 2005 as a “pathetic 0.4% per year”. It also indicated that the gain in new prices over the last 20 years in the US is just a fraction of what the average investor in stocks would have made.
While some of these arguments may reflect sentiment currently holding force in our own country and may make for interesting reading, there seems to be a flaw in the assumption that those who rent are actually saving the money that might be going towards a bond payment. The reality is that South Africa’s relatively dismal national savings rate puts paid to that idea.
There are certainly plenty of good reasons to rent rather than buy a property, particularly in light of the limited overhead costs each month and the peace of mind that comes with knowing that your hands aren’t tied financially for the foreseeable future. However, if you manage your property carefully then it is possible for ordinary income earners to create substantial wealth through ownership.
There are plenty of people who will attest to the fact that their financial independence began with an investment in simple bricks and mortar. In the long run, at the very least you should own the roof over your head, as it may just be shelter, but it is your shelter and no one can take that away from you.
The information in this article is courtesy of Jackie Cameron (“Renting vs buying: 4 property myths”, Realestateweb, 18 April 2008).
Buy or sell property in South Africa.
In the current property market climate, investors are understandably shy and there are many potential buyers who are choosing to rent and rather bide their time until the market improves. However, there are experts who believe that the property market is set to hit rock bottom in the coming months and this is in fact the ideal time to make that investment.
In an article for Realestateweb, Jackie Cameron asks the question, “Is it really better to be a landlord than a tenant?” This was inspired by an American article called ‘Rent vs Buy Myths that Ruined the Housing Market’, which discussed some of the so-called myths that made people justify buying houses that they probably could not afford during the property boom in the US.
Myth 1: Renting is like throwing your money away.
Those who believe that renting is the way forward seem to think that buyers pay money to the bank for the first 5 years for the privilege of borrowing money. In contrast, renters pay for one thing each month: shelter – they don’t pay interest, tax and other property-related costs.
Myth 2: It doesn’t cost more to buy than it does to rent.
Those who decide to rent pay a deposit, while those who own spend loads of money on the initial costs, with the home needing to appreciate in value considerably before these costs become insignificant, is the argument here.
Myth 3: Buyers have assets; renters do not.
Those in favour of renting say that while they may not co-own a home with a lender, this doesn’t mean that they don’t have assets. In fact, they have extra cash to pay for these other assets.
Myth 4: Houses are a good investment.
There are some renters who believe that housing is “not an investment” and that although home prices can rise, the rate of appreciation on housing does not extend beyond inflation levels. The American article cites an annual real return on US housing gauged between 1890 and 2005 as a “pathetic 0.4% per year”. It also indicated that the gain in new prices over the last 20 years in the US is just a fraction of what the average investor in stocks would have made.
While some of these arguments may reflect sentiment currently holding force in our own country and may make for interesting reading, there seems to be a flaw in the assumption that those who rent are actually saving the money that might be going towards a bond payment. The reality is that South Africa’s relatively dismal national savings rate puts paid to that idea.
There are certainly plenty of good reasons to rent rather than buy a property, particularly in light of the limited overhead costs each month and the peace of mind that comes with knowing that your hands aren’t tied financially for the foreseeable future. However, if you manage your property carefully then it is possible for ordinary income earners to create substantial wealth through ownership.
There are plenty of people who will attest to the fact that their financial independence began with an investment in simple bricks and mortar. In the long run, at the very least you should own the roof over your head, as it may just be shelter, but it is your shelter and no one can take that away from you.
The information in this article is courtesy of Jackie Cameron (“Renting vs buying: 4 property myths”, Realestateweb, 18 April 2008).
Buy or sell property in South Africa.
Friday, August 22, 2008
Divergence Prominent in Light of SA Property Market Future
Views Differ on Future of Property
According to a recent article published by Business Report, economists seem to have divergent views when it comes to the property market outlook. This came to light at a fractional ownership conference in Cape Town yesterday.
Property strategist at FNB’s home loans department, John Loos forecast an improvement in sentiment, saying that now is “probably as good as it gets” in terms of the best time to buy property before prices start to recover.
Erwin Rode, of property research company Rode & Associates, had a much more pessimistic view, saying that “a long period of stagnation lies ahead” and this could last as long as five years. “That means prices of houses will lag inflation. That is, if building costs go up by 8 percent, house prices will rise by 4 percent in nominal terms,” he said.
According to Rode, this is the result of people in developed countries having lived beyond their means and surviving for many years on borrowed money. Fractional ownership is governed by the same regulations as timeshare and although there are several different models, the main difference is that it is confined essentially to the very upmarket property. Rode hoped that this would continue to be the case and that banks would stay out of financing it.
Dirk Wilson, co-founder of fractionalownership.co.za and the conference organizer, said that fractional ownership differed from timeshare in that the investors gained a share of equity in the property and not just the right to occupy the premises or let it for a certain period. Fractional sales are said to be “doing quite well” considering the state of the property market, but more participants are needed in providing properties, which have dropped from 64 six months ago to just 34 companies at present.
There has been a great deal of interest in South Africa from overseas investors and buyers looking for properties available now and not in the planning stage, such as golf estates or near the beach. There have to be hospitality and leisure facilities of a high standard, such as room service and a spa. Fractional ownership is really an investment in lifestyle and thus comes with a certain standard of living.
According to Wilson, 74 percent of enquiries about fractional title investment properties in South Africa were from overseas, including the UK, the US, Australia and the UAE. Also, a large number of South African expatriates are interested in property investment here, but “not a whole house,” as he said.
The information in this article is courtesy of Audrey d’Angelo (“Economists give widely differing views on property”, Business Report, 22 August 2008).
If you would like to buy or sell property in South Africa, please visit www.sahometraders.co.za.
According to a recent article published by Business Report, economists seem to have divergent views when it comes to the property market outlook. This came to light at a fractional ownership conference in Cape Town yesterday.
Property strategist at FNB’s home loans department, John Loos forecast an improvement in sentiment, saying that now is “probably as good as it gets” in terms of the best time to buy property before prices start to recover.
Erwin Rode, of property research company Rode & Associates, had a much more pessimistic view, saying that “a long period of stagnation lies ahead” and this could last as long as five years. “That means prices of houses will lag inflation. That is, if building costs go up by 8 percent, house prices will rise by 4 percent in nominal terms,” he said.
According to Rode, this is the result of people in developed countries having lived beyond their means and surviving for many years on borrowed money. Fractional ownership is governed by the same regulations as timeshare and although there are several different models, the main difference is that it is confined essentially to the very upmarket property. Rode hoped that this would continue to be the case and that banks would stay out of financing it.
Dirk Wilson, co-founder of fractionalownership.co.za and the conference organizer, said that fractional ownership differed from timeshare in that the investors gained a share of equity in the property and not just the right to occupy the premises or let it for a certain period. Fractional sales are said to be “doing quite well” considering the state of the property market, but more participants are needed in providing properties, which have dropped from 64 six months ago to just 34 companies at present.
There has been a great deal of interest in South Africa from overseas investors and buyers looking for properties available now and not in the planning stage, such as golf estates or near the beach. There have to be hospitality and leisure facilities of a high standard, such as room service and a spa. Fractional ownership is really an investment in lifestyle and thus comes with a certain standard of living.
According to Wilson, 74 percent of enquiries about fractional title investment properties in South Africa were from overseas, including the UK, the US, Australia and the UAE. Also, a large number of South African expatriates are interested in property investment here, but “not a whole house,” as he said.
The information in this article is courtesy of Audrey d’Angelo (“Economists give widely differing views on property”, Business Report, 22 August 2008).
If you would like to buy or sell property in South Africa, please visit www.sahometraders.co.za.
Thursday, August 21, 2008
Green Phenomenon Takes Hold in South Africa
Property Entering Green Era
Astute property developers, investors and entrepreneurs will no doubt already be aware of the next big era in the property, namely the profound impact that ‘green building’ practices are going to have on the industry in the foreseeable future. There are boundless business opportunities emerging as South Africa’s commercial property developers and investors join the bandwagon of what is fast-becoming a global phenomenon.
Building design is undergoing a transformation, moving away from work environments that are closed off from the outside world towards places of business designed to be at one with the natural surroundings. For instance, the power-draining air conditioners so often found in high-rise buildings and the shimmering glass towers that trap heat are set to become a thing of the past, as landlords and tenants demand real estate more reliant on renewable energy and reusable materials.
The recent IPD/Sapoa Property Investment Conference held in Cape Town recently focused primarily on the global trend towards constructing and refurbishing buildings along environmentally friendly lines. Delegates were informed that commercial property and the world’s airlines are two of the major contributors towards the production of dangerous carbon gas emissions destroying the earth’s ozone layer and as a result, contributing to the ever-looming global warming.
The South African real estate industry has only recently begun adopting green building standards, but the movement is expected to gain momentum. The Green Star Rating System is currently being introduced and although the ratings are not compulsory, pressure is anticipated to come from corporates, particularly those with international shareholders who want to be seen as socially and environmentally responsible.
According to the chairman of the Green Building Council of SA, Bruce Kerswill, “We in South Africa haven’t felt the sense of urgency on this yet. But we can expect to see stakeholder and government pressure here soon. South Africa has agreed to cut carbon emissions”. While some may not be inspired by the moral aspect, there is certainly a compelling business case for the greener option, with research showing that productivity can increase from about 5% to 15% with employees who work in a ‘green’ building.
Like all the healthier things in life, green buildings do tend to be on the expensive side when it comes to building and ultimately renting, however the cost is not quite as much as one might expect. For instance, in Australia a four-star building would cost the same as a non-green building in capital costs, while a five-star building requires more technology and would be around 5% extra in total cost. At 11% more for a six-star building, Kerswill believes this is “not a huge premium” to pay.
Buildings that promote the use of public transport rather than the use of private vehicles by being situated close to major transport nodes or because smaller cars get the best parking will earn more points than those that don’t. There is a huge emphasis on recycling and points are earned for sourcing local products rather than importing cheaper ones from elsewhere. There is another category that rewards “innovation” and this aims to “stimulate out of the box thinking” rather than simply adhering to the ratings.
Kerswill insists that this is not just a passing fad. Development director at Old Mutual Investment Group Property Investments, Brent Wilshire says that his organization has looked at their “top eight” buildings in a bid to identify areas to “make a difference”. He also produced some interesting figures indicating the extent to which these buildings ‘guzzle natural resources’. Just a 20% reduction in water use at these buildings alone would conserve enough water to fill 133 swimming pools every day.
“The important thing is you need to be able to measure then you can set targets,” Wiltshire says, highlighting the value of a green building rating system. “In our new assets, the green building principles are best practice. What is important is to get the right team in place. It’s about putting the philosophy in place upfront and making sure the team buys into it – it’s about an attitude”.
Managing director of IPD Occupiers and Management in the UK, Christopher Hedley indicates that corporate property will come under increased pressure and scrutiny for environmental performance and compliance. “Property investors face risks. Tenants will act and valuers will respond,” he says. He adds that as more green buildings come onto the market, they will start to get cheaper. “There is an increasing pressure to deliver. We have the need for accurate information. We’ve got to create monitoring and targets and need to be able to prove performance,” Hedley says.
The information in this article is courtesy of Jackie Cameron (“Making money in the new property era”, Realestateweb, 20 August 2008).
If you would like to buy or sell property in South Africa, please visit www.sahometraders.co.za.
Astute property developers, investors and entrepreneurs will no doubt already be aware of the next big era in the property, namely the profound impact that ‘green building’ practices are going to have on the industry in the foreseeable future. There are boundless business opportunities emerging as South Africa’s commercial property developers and investors join the bandwagon of what is fast-becoming a global phenomenon.
Building design is undergoing a transformation, moving away from work environments that are closed off from the outside world towards places of business designed to be at one with the natural surroundings. For instance, the power-draining air conditioners so often found in high-rise buildings and the shimmering glass towers that trap heat are set to become a thing of the past, as landlords and tenants demand real estate more reliant on renewable energy and reusable materials.
The recent IPD/Sapoa Property Investment Conference held in Cape Town recently focused primarily on the global trend towards constructing and refurbishing buildings along environmentally friendly lines. Delegates were informed that commercial property and the world’s airlines are two of the major contributors towards the production of dangerous carbon gas emissions destroying the earth’s ozone layer and as a result, contributing to the ever-looming global warming.
The South African real estate industry has only recently begun adopting green building standards, but the movement is expected to gain momentum. The Green Star Rating System is currently being introduced and although the ratings are not compulsory, pressure is anticipated to come from corporates, particularly those with international shareholders who want to be seen as socially and environmentally responsible.
According to the chairman of the Green Building Council of SA, Bruce Kerswill, “We in South Africa haven’t felt the sense of urgency on this yet. But we can expect to see stakeholder and government pressure here soon. South Africa has agreed to cut carbon emissions”. While some may not be inspired by the moral aspect, there is certainly a compelling business case for the greener option, with research showing that productivity can increase from about 5% to 15% with employees who work in a ‘green’ building.
Like all the healthier things in life, green buildings do tend to be on the expensive side when it comes to building and ultimately renting, however the cost is not quite as much as one might expect. For instance, in Australia a four-star building would cost the same as a non-green building in capital costs, while a five-star building requires more technology and would be around 5% extra in total cost. At 11% more for a six-star building, Kerswill believes this is “not a huge premium” to pay.
Buildings that promote the use of public transport rather than the use of private vehicles by being situated close to major transport nodes or because smaller cars get the best parking will earn more points than those that don’t. There is a huge emphasis on recycling and points are earned for sourcing local products rather than importing cheaper ones from elsewhere. There is another category that rewards “innovation” and this aims to “stimulate out of the box thinking” rather than simply adhering to the ratings.
Kerswill insists that this is not just a passing fad. Development director at Old Mutual Investment Group Property Investments, Brent Wilshire says that his organization has looked at their “top eight” buildings in a bid to identify areas to “make a difference”. He also produced some interesting figures indicating the extent to which these buildings ‘guzzle natural resources’. Just a 20% reduction in water use at these buildings alone would conserve enough water to fill 133 swimming pools every day.
“The important thing is you need to be able to measure then you can set targets,” Wiltshire says, highlighting the value of a green building rating system. “In our new assets, the green building principles are best practice. What is important is to get the right team in place. It’s about putting the philosophy in place upfront and making sure the team buys into it – it’s about an attitude”.
Managing director of IPD Occupiers and Management in the UK, Christopher Hedley indicates that corporate property will come under increased pressure and scrutiny for environmental performance and compliance. “Property investors face risks. Tenants will act and valuers will respond,” he says. He adds that as more green buildings come onto the market, they will start to get cheaper. “There is an increasing pressure to deliver. We have the need for accurate information. We’ve got to create monitoring and targets and need to be able to prove performance,” Hedley says.
The information in this article is courtesy of Jackie Cameron (“Making money in the new property era”, Realestateweb, 20 August 2008).
If you would like to buy or sell property in South Africa, please visit www.sahometraders.co.za.
Subscribe to:
Posts (Atom)
Posts
