The information in this article is courtesy of Realestateweb (“Politicians won’t move property market yet – bank”, 25 September 2008).
FNB’s property strategist, John Loos believes that the recent change in president may have rattled some cages, but it “is unlikely to change an already deteriorating residential market trend”.
Kgalema Motlanthe’s somewhat dramatic entry into the presidency following the ANC’s recall of Thabo Mbeki and the subsequent resignation of cabinet ministers en masse has certainly caused a stir, but Loos says that this will not have a significant impact on residential real estate.
Loos issued a report yesterday saying that, “Insofar as such events create negative sentiment in and towards the country, they are potentially negative for residential property performance”. The direct impact can be in the guise of higher emigration rates from sensitive “suburban” markets, which are still dominated by three minority population groups.
According to Loos, “Indirect impacts can occur when general investor confidence is negatively affected, which can have a negative impact on economic growth and thus on purchasing power for residential property”.
The recent events have likely created the perception of factional divisions within the ANC and highlighted a party whose succession plan was not clearly thought out, especially given the temporary uncertainty surrounding the minister of finance, Trevor Manuel, who has played an integral part in stabilizing South Africa’s economy.
Where some would refer to the situation as a crisis, Loos is more inclined to “call it democracy functioning reasonably well”. He notes that constitutional procedures have been observed and the outgoing president “has accepted the decision, has not mobilized his army or a band of thugs to protect his position, and has not started to import weapons from China or any such thing”.
Loos went on to say that the public spat between Mbeki and ANC leader Jacob Zuma “looked pretty tame” in comparison to the showdown between US politicians of late. Mbeki has merely stepped down and the country does not seem to require a special negotiation process to remove him from office.
However, the events can’t be expected to alter the trends of declining residential property sales, home loan applications and emigration selling that continues to plague the South African market. Loos believes that economic factors should overshadow political events and that there are various things needed to turn the market for the better:
- An expected turn in inflation in the final quarter of the year, with an improvement in numbers “expected to cause real disposable income growth to turn upward as from early 2009”;
- A declining debt-to-disposable income ratio for households, which in turn is expected to cause the debt service to fall in the last three months of the year;
- Interest rates falling, which is expected from April; and
- The “ultimate recovery of the global economy”, which will have a positive impact on the local economy.
Loos seems to think that “a year from now, when the dust has settled on the current process of political leadership change”, the economy will turn for the better and combined with the benefits of 2010, there will be a significant decline in emigration. He added that policy shifts are more important than people shifts or policy wish lists.
“The world’s and our own political history tells us that the utterances from new leaders on their path to power are not always a good indication of what policies are to follow,” Loos advised.
In the meantime, head of Seeff Properties, Samuel Seeff has warned that an improvement in the property market could be further off than expected, thanks in part to the latest political saga. With an estimated 20 000 estate agents being forced out of the industry, the residential sector has taken a firm beating this year, with sales plummeting and falling property prices.
The bad performance in the housing market has been linked in part to negative sentiment about South Africa, with sellers increasingly citing emigration as a motivation behind offloading a home and consumers finding it increasingly difficult to obtain finance due to the stricter credit laws in place.
Many sellers and players in the industry have been biding their time in the hope that interest rates will improve, but even that looks unlikely with recent hints being dropped by SA Reserve Bank governor, Tito Mboweni.
Buy property in the Overberg.
Friday, September 26, 2008
Thursday, September 18, 2008
Revision of Property Law in Favour of First Time Buyers Suggested
First Time Buyer Concessions Called For
Jeanne van Jarsveldt, financial director of RE/MAX Southern Africa has indicated that a serious review of the law is needed to stimulate the property market and encourage first time buyers to invest. He would like to see the current threshold on payment of transfer duty to be enforced on sales over R1 million and this should be accompanied by tax breaks for first time buyers.
A “rescue package from government” seems to be what is needed in order to avoid further distress in the South African property market. Van Jaarsveldt said that the US anchored its recently launched Housing Stimulus Bill around a tax break of over R52 000 for first time buyers in an effort to stabilize the flailing market.
A similar tax concession in South Africa would go along way towards relieving some of the pressure on affordability for first time buyers, who are trapped by the five percentage point interest rate increases over the last two years.
Van Jaarsveldt also believes that a temporary suspension of transfer duty on all price categories is worth considering, at least until the market has begun to recover. He indicated that the Real Estate Institute of Australia is pressuring the government for an exemption from stamp duty on first time buyer transactions, as well as on retirees downsizing their properties. The same is happening with Britain’s National Association of Estate Agents in the UK.
According to economists, abolishing transfer tax would cause the treasury to lose around R10 billion a year, which would not make too much of a dent in the government’s budget, but would certainly ease the buying and selling of homes.
Mike Bennet, head of ProProp Franchising Group, agrees with van Jaarsveldt in his call for a temporary suspension of all transfer duty on sales under R1 million until the market starts to improve and would also like to see banks given permission to relax the National Credit Act rules on houses selling for less than R700 000.
Van Jaarsveldt refers to the property market as “a pillar of our economy” and believes that the current high number of negatives surrounding the market make it absolutely crucial that some concession be made in order to stimulate home ownership.
He said, “To ignore the situation seriously jeopardizes the growth of the emergent black middle class who we all know are vital at this stage of our country’s transformation”.
The information in this article is courtesy of Jeanne van Jaarsveldt (“First-time buyers need a break – ReMax”, Business Report, 17 September 2008).
Property for sale in the Overberg.
Jeanne van Jarsveldt, financial director of RE/MAX Southern Africa has indicated that a serious review of the law is needed to stimulate the property market and encourage first time buyers to invest. He would like to see the current threshold on payment of transfer duty to be enforced on sales over R1 million and this should be accompanied by tax breaks for first time buyers.
A “rescue package from government” seems to be what is needed in order to avoid further distress in the South African property market. Van Jaarsveldt said that the US anchored its recently launched Housing Stimulus Bill around a tax break of over R52 000 for first time buyers in an effort to stabilize the flailing market.
A similar tax concession in South Africa would go along way towards relieving some of the pressure on affordability for first time buyers, who are trapped by the five percentage point interest rate increases over the last two years.
Van Jaarsveldt also believes that a temporary suspension of transfer duty on all price categories is worth considering, at least until the market has begun to recover. He indicated that the Real Estate Institute of Australia is pressuring the government for an exemption from stamp duty on first time buyer transactions, as well as on retirees downsizing their properties. The same is happening with Britain’s National Association of Estate Agents in the UK.
According to economists, abolishing transfer tax would cause the treasury to lose around R10 billion a year, which would not make too much of a dent in the government’s budget, but would certainly ease the buying and selling of homes.
Mike Bennet, head of ProProp Franchising Group, agrees with van Jaarsveldt in his call for a temporary suspension of all transfer duty on sales under R1 million until the market starts to improve and would also like to see banks given permission to relax the National Credit Act rules on houses selling for less than R700 000.
Van Jaarsveldt refers to the property market as “a pillar of our economy” and believes that the current high number of negatives surrounding the market make it absolutely crucial that some concession be made in order to stimulate home ownership.
He said, “To ignore the situation seriously jeopardizes the growth of the emergent black middle class who we all know are vital at this stage of our country’s transformation”.
The information in this article is courtesy of Jeanne van Jaarsveldt (“First-time buyers need a break – ReMax”, Business Report, 17 September 2008).
Property for sale in the Overberg.
Monday, September 15, 2008
Tips on How to Make Money in Property
How to make money in residential real estate
Jackie Cameron*
12 September 2008
10 of the best tips from Realestateweb.co.za's commentators. Add yours to the list
The great thing about internet news sites that are open for comments is that the only or last word isn't left to editors, official company spokespeople or whoever has the smartest PR.
Often site community members make valuable contributions, like on Realestateweb.co.za where property investors - past, present and budding - have been contributing fantastic pearls of wisdom on the bricks-and-mortar asset class.
Here's a selection of some of the best ones, sparked this week by insightful article "Property investment as your own business", which was written by P3 Investment Group CEO Dr JD du Toit.
Du Toit explains why property's returns can sound too good to be true because people mistakenly think these are passive investments instead of viewing residential portfolios as businesses.
Residential buy-to-lets can be an alternative to a pension through using other people's time and other people's money - and can help you stretch your resources to the maximum, notes Du Toit.
If you are contemplating becoming a property investor, do read the article as well as the debate and additional advice and tips generously given below it by visitors.
Realestateweb.co.za compiled this list with a view to highlighting some of the pros and cons of investing in residential real estate now.
Of course we may have missed some that you believe more important, too, so please add your favourites or new suggestions to the list by using the comments' tool below:
1. Property is painful when you first start. As time goes on it gets easier and fun (when you become cash positive). Be careful not to get greedy though...eish. From: Mthoko
2. It is no secret that currently prices and rents are out of sync, and it will take a while before the equation makes sense. I am a BTL (Buy-To-Let) investor myself , but would be very careful in expanding (and especially starting) the business now. From: Gem
3. You do not remortgage one to buy another, you treat each one individually...the more you have, the greater the economies of scale with expenses and also any possible downsides (like maintenance and vacancies). From: Gem.
4. Buying properties that are cashflow positive means that when you are ready to buy again the banks view your other properties in a positive manner.
As an example: say I have a property purchased at R500k with a monthly bond of R7 500/pm. Now let's say I purchased it 5 years ago, have been renting it out and currently getting R8 500/pm rental. So I am (in) cash to the tune of R1 000/pm.
Now if I have 10 like this, that's R10k/pm. So when I go to the bank to buy property number 11, I have R10k income to add to whatever other income I have and basically ALL my other properties are not seen as exposure - so I can basically buy forever using these principles.
At some stage I can also refinance if I choose, but it's all about cashflow. From: Brennan
5. Nothing could be simpler than buying shares. Almost no paperwork, no government departments to deal with, no lawyers, estate agents, management agents, get the picture?
Buying SATRIX40 is a no brainer. From: OS
6. Take a good alternative: ApexHi shares.
They (listed property shares) pay quarterly interest, with an initial yield greater than 10%.
Use the income that you will be sacrificing upfront on your BTL venture and buy these. As the interest is paid out to you, reinvest and buy more. From: Willem Ras.
7. If declining interest rates are a bull signal then buy now because the R157 (a government bond) indicates the falling interest rate scenario is with us. Your biggest friend is the NCA (National Credit Act) because it is keeping the masses out of the market. However, their pent up demand will be unleashed as interest rates fall. It is always best to buy when sales are slow and the mood increasingly desperate. From: Free the Rest.
8. I predict: That after the property crash, there will be a property boom.
All you property bears may laugh at me that property prices can never go up. But yes they will.
I predict so therefore I am right. From: Naustrodamus.
9. Bottom line is yes you gotta understand your investments and/or business. From: Brennan
10. Property is here to stay. Shares come and go...property is mostly for keeps. From: TJ
Got a great property investment tip? Share it on Realestateweb.co.za by commenting here or below other articles.
Find property for sale in the Overberg.
Jackie Cameron*
12 September 2008
10 of the best tips from Realestateweb.co.za's commentators. Add yours to the list
The great thing about internet news sites that are open for comments is that the only or last word isn't left to editors, official company spokespeople or whoever has the smartest PR.
Often site community members make valuable contributions, like on Realestateweb.co.za where property investors - past, present and budding - have been contributing fantastic pearls of wisdom on the bricks-and-mortar asset class.
Here's a selection of some of the best ones, sparked this week by insightful article "Property investment as your own business", which was written by P3 Investment Group CEO Dr JD du Toit.
Du Toit explains why property's returns can sound too good to be true because people mistakenly think these are passive investments instead of viewing residential portfolios as businesses.
Residential buy-to-lets can be an alternative to a pension through using other people's time and other people's money - and can help you stretch your resources to the maximum, notes Du Toit.
If you are contemplating becoming a property investor, do read the article as well as the debate and additional advice and tips generously given below it by visitors.
Realestateweb.co.za compiled this list with a view to highlighting some of the pros and cons of investing in residential real estate now.
Of course we may have missed some that you believe more important, too, so please add your favourites or new suggestions to the list by using the comments' tool below:
1. Property is painful when you first start. As time goes on it gets easier and fun (when you become cash positive). Be careful not to get greedy though...eish. From: Mthoko
2. It is no secret that currently prices and rents are out of sync, and it will take a while before the equation makes sense. I am a BTL (Buy-To-Let) investor myself , but would be very careful in expanding (and especially starting) the business now. From: Gem
3. You do not remortgage one to buy another, you treat each one individually...the more you have, the greater the economies of scale with expenses and also any possible downsides (like maintenance and vacancies). From: Gem.
4. Buying properties that are cashflow positive means that when you are ready to buy again the banks view your other properties in a positive manner.
As an example: say I have a property purchased at R500k with a monthly bond of R7 500/pm. Now let's say I purchased it 5 years ago, have been renting it out and currently getting R8 500/pm rental. So I am (in) cash to the tune of R1 000/pm.
Now if I have 10 like this, that's R10k/pm. So when I go to the bank to buy property number 11, I have R10k income to add to whatever other income I have and basically ALL my other properties are not seen as exposure - so I can basically buy forever using these principles.
At some stage I can also refinance if I choose, but it's all about cashflow. From: Brennan
5. Nothing could be simpler than buying shares. Almost no paperwork, no government departments to deal with, no lawyers, estate agents, management agents, get the picture?
Buying SATRIX40 is a no brainer. From: OS
6. Take a good alternative: ApexHi shares.
They (listed property shares) pay quarterly interest, with an initial yield greater than 10%.
Use the income that you will be sacrificing upfront on your BTL venture and buy these. As the interest is paid out to you, reinvest and buy more. From: Willem Ras.
7. If declining interest rates are a bull signal then buy now because the R157 (a government bond) indicates the falling interest rate scenario is with us. Your biggest friend is the NCA (National Credit Act) because it is keeping the masses out of the market. However, their pent up demand will be unleashed as interest rates fall. It is always best to buy when sales are slow and the mood increasingly desperate. From: Free the Rest.
8. I predict: That after the property crash, there will be a property boom.
All you property bears may laugh at me that property prices can never go up. But yes they will.
I predict so therefore I am right. From: Naustrodamus.
9. Bottom line is yes you gotta understand your investments and/or business. From: Brennan
10. Property is here to stay. Shares come and go...property is mostly for keeps. From: TJ
Got a great property investment tip? Share it on Realestateweb.co.za by commenting here or below other articles.
Find property for sale in the Overberg.
Monday, September 8, 2008
There is a Knack to Selling Property
How to Thrive in Tough Conditions
Despite the current economic conditions where the property market is particularly sluggish, there are experts who believe that there are still ways to maximize profits. Bill Gibson is a sales specialist who spoke to estate agents at a national conference of the Institute of Estate Agents (IEASA) in Johannesburg recently. He insisted that times like these can often provide the best opportunities to gain market share.
While sellers are in abundance, finding them is still the most important factor, Gibson says. “This is the time that estate agents need to be actively involved in listing properties if they want them sold,” he urges. This means increasing canvassing by between 20% and 40% and Gibson also suggested that estate agents hold show houses with properties where other agents have the mandate. This obviously requires permission from the seller and agent, as well as a follow up on all potential buyers who walk through the show house door.
According to Gibson, investment seminars are an ideal platform to mingle and circulate, while referrals are “a good source of potential buyers and sellers”. This all begins with one’s circle of friends and business associates. Even in tough times, there are still buyers and agents simply have to work that much harder to find them.
Business and coaching specialist, Graham le Sar said that the market right now is just as it should be. Estate agents, on the other hand, need to become more innovative in their response to the market if they are to sell properties successfully. He likened real estate to a contact sport, saying that estate agents constantly have to engage potential buyers, sellers and homeowners to keep the momentum going.
Le Sar went on to say that, “The biggest mistake estate agents make is doing nothing when the property market is down”. He says that estate agents really need to find ways of preparing themselves for a change in the market. While they may work less, they also need to work more thoroughly and ensure that every detail of a transaction is covered fully and clearly explained to clients. “Homeowners will always own houses and these are the first potential buyers when they sell,” le Sar points out.
Graham Gavin, author of Real Estate Power, has said that successful estate agents generate new ideas and fresh leads on a daily basis. He also believes that it is possible to thrive in a downcycle if you have the right attitude, plus a few extra measures thrown in that make the estate agent stand out in a crowd.
Gavin also said that estate agents are not paid for the time that they put into selling houses, but how they sell them. For instance, if you sell successfully to one client then you will no doubt get more referrals for the outstanding service. “To thrive in a down market, think smart and swiftly implement those strategies in every transaction you make,” advises Gavin.
The information in this article is courtesy of Denise Mhlanga (“Making money in a sluggish property market”, Realestateweb, 8 September 2008).
Find property in the Western Cape's Overberg region.
Despite the current economic conditions where the property market is particularly sluggish, there are experts who believe that there are still ways to maximize profits. Bill Gibson is a sales specialist who spoke to estate agents at a national conference of the Institute of Estate Agents (IEASA) in Johannesburg recently. He insisted that times like these can often provide the best opportunities to gain market share.
While sellers are in abundance, finding them is still the most important factor, Gibson says. “This is the time that estate agents need to be actively involved in listing properties if they want them sold,” he urges. This means increasing canvassing by between 20% and 40% and Gibson also suggested that estate agents hold show houses with properties where other agents have the mandate. This obviously requires permission from the seller and agent, as well as a follow up on all potential buyers who walk through the show house door.
According to Gibson, investment seminars are an ideal platform to mingle and circulate, while referrals are “a good source of potential buyers and sellers”. This all begins with one’s circle of friends and business associates. Even in tough times, there are still buyers and agents simply have to work that much harder to find them.
Business and coaching specialist, Graham le Sar said that the market right now is just as it should be. Estate agents, on the other hand, need to become more innovative in their response to the market if they are to sell properties successfully. He likened real estate to a contact sport, saying that estate agents constantly have to engage potential buyers, sellers and homeowners to keep the momentum going.
Le Sar went on to say that, “The biggest mistake estate agents make is doing nothing when the property market is down”. He says that estate agents really need to find ways of preparing themselves for a change in the market. While they may work less, they also need to work more thoroughly and ensure that every detail of a transaction is covered fully and clearly explained to clients. “Homeowners will always own houses and these are the first potential buyers when they sell,” le Sar points out.
Graham Gavin, author of Real Estate Power, has said that successful estate agents generate new ideas and fresh leads on a daily basis. He also believes that it is possible to thrive in a downcycle if you have the right attitude, plus a few extra measures thrown in that make the estate agent stand out in a crowd.
Gavin also said that estate agents are not paid for the time that they put into selling houses, but how they sell them. For instance, if you sell successfully to one client then you will no doubt get more referrals for the outstanding service. “To thrive in a down market, think smart and swiftly implement those strategies in every transaction you make,” advises Gavin.
The information in this article is courtesy of Denise Mhlanga (“Making money in a sluggish property market”, Realestateweb, 8 September 2008).
Find property in the Western Cape's Overberg region.
Monday, September 1, 2008
Residential property has it 'tough'
September 01 2008 at 11:59AM
Residential property is still in the doldrums, Standard Bank said on Monday in its monthly residential property gauge.
Standard Bank's median house price eased by 1,8 percent year-on-year in August, while the median house price in level terms was R550 000. The five month moving average growth was recorded at 7,7 percent year-on-year.
"After a period of mostly National Credit Act (NCA) induced volatility, Standard Bank's residential property index returned to normality during the last two months and presents a clearer depiction of house price trends, but is still reflective of the tough financial and economic conditions households face," Standard Bank said.
Tough conditions would remain for residential property until fundamental drivers of the market took a turn for the better, which may be some time off.
Recent monthly estimates of the growth in the Standard Bank median house price had overstated the extent of the decline in South African residential property prices.
This was the result of the NCA induced base effect that was established in the months leading up to the implementation of the Act last year.
"Uncertainty regarding the possibility of more stringent credit granting criteria led to an increase in the proportion of higher valued houses in the underlying home loans sample from which the median house price is calculated."
Subsequently, the reduced affordability of housing, exacerbated by higher mortgage rates, led to a decline in the demand for residential property and a substantial softening in house price growth, the bank added.
This was aggravated by the base effect, resulting in the deep negative year-on-year growth rates seen in May and June.
"The July and August outcomes are, in our view, a more accurate reflection of aggregate house price trends." - Sapa
This article is courtesy of the IOL website.
Find property in the Overberg.
Residential property is still in the doldrums, Standard Bank said on Monday in its monthly residential property gauge.
Standard Bank's median house price eased by 1,8 percent year-on-year in August, while the median house price in level terms was R550 000. The five month moving average growth was recorded at 7,7 percent year-on-year.
"After a period of mostly National Credit Act (NCA) induced volatility, Standard Bank's residential property index returned to normality during the last two months and presents a clearer depiction of house price trends, but is still reflective of the tough financial and economic conditions households face," Standard Bank said.
Tough conditions would remain for residential property until fundamental drivers of the market took a turn for the better, which may be some time off.
Recent monthly estimates of the growth in the Standard Bank median house price had overstated the extent of the decline in South African residential property prices.
This was the result of the NCA induced base effect that was established in the months leading up to the implementation of the Act last year.
"Uncertainty regarding the possibility of more stringent credit granting criteria led to an increase in the proportion of higher valued houses in the underlying home loans sample from which the median house price is calculated."
Subsequently, the reduced affordability of housing, exacerbated by higher mortgage rates, led to a decline in the demand for residential property and a substantial softening in house price growth, the bank added.
This was aggravated by the base effect, resulting in the deep negative year-on-year growth rates seen in May and June.
"The July and August outcomes are, in our view, a more accurate reflection of aggregate house price trends." - Sapa
This article is courtesy of the IOL website.
Find property in the Overberg.
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