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| What Property Buyers Look for in Values |
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Overpricing, underpricing and market-related are terms that are often bandied about in the prevailing tough market conditions, but what should a seller see in his house's actual value?
"These are just some of the reasons why people buy and sell property. Buildings frequently do not have the same value to the buyer and seller. For example, a house that is going to be demolished to build a block of flats would have a value as a family home to the seller, but only a ground value to the buyer. The site would actually be of more value to him if there were no buildings on it as he now has to incur the cost of demolishing the house before he can build," he says.
"When selling or buying a house there is a lot of emotion involved. The seller has often put a great deal of time, effort and love into his home whereas the buyer will not see any value in these personal emotions."
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| What 2009 Holds for Different Property Sectors |
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After a tough 2008, the year started on a positive note with a huge 19% drop in petrol prices and some food prices due to a good agriculture season.
However, economist predicts a bleak first half of 2009 with economic growth coming very close to a recession, with the overall outlook for economic growth during 2009 predicted to be between 0,5% and 1%.
Property services company JHI gazes into the crystal ball to see what's ahead for the various property sectors in 2009. One of the biggest concerns for 2009 is increased liquidations and rising unemployment. December has seen more liquidations of companies since mid 1990's and South Africa has been in a labour recession for a while which is predicted not to end in the immediate future. Liquidations lead to higher unemployment which means less buying power which will increasingly affect the retail sector.
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| South African Property Market Not Entirely Immune |
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The last few months have clearly shown that South Africa is not protected from or immune to the global financial problems.
So says Bill Rawson, chairman of Rawson Properties, who adds that this has implications for the property market.
"Much has been said about how we are not too badly affected by the sub-prime crisis and while this is true it is also true that the South African share market has lost half its value, GDP is dropping by 1%, the motor industry is having to cut back severely and, with a depressed economy and lower tax returns, the government may have to cut back on its infrastructural and other spending. A full scale recovery is, therefore, unlikely before 2010."
Where, therefore, can an investor now place his funds (if he still has funds) with a reasonable expectation of a return?
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| Confused by the Myriad of Mortgage Options Available? |
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Many property buyers are confused by the myriad of mortgage options available and whether they should employ a mortgage originator - and if so, what are the benefits.
With a myriad of mortgage products on the market, it is not always easy to know where to go to obtain the exact bond finance you need at the time and in the circumstances.
That's where the mortgage originator comes into the picture, says Sifiso Msomi of Shepstone & Wylie Attorneys' property department. "However, many people are unsure of exactly what services a mortgage originator should offer and what benefits they provide", he adds.
He explains that the key function of a mortgage originator is to introduce a borrower to a lender and to act as a personal consultant in an attempt to help you obtain mortgage finance for a property. "The mortgage originator will apply to and negotiate with a financial institution in respect of the home loan on your behalf".
| Shepstone & Wylie Attorneys, 07-01-2009 |
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| Cape Town Aims for 'Green' Cheap Housing |
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The possibility of "greening" low-cost housing is being tested by the City of Cape Town.
Head of the New Housing Department, Peter Oscroft, said the city was trying to get an idea of what features could potentially be included into the low-cost housing budgets in order to increase their energy efficiency and reduce operational costs in the long run.
He said there were things that could be done which did not necessarily cost much, such as constructing awnings over north-facing windows or using LED instead of incandescent lighting.
Such features would either be included in the specifications for low cost housing, or exist as an add-on to the standard specifications. Because of the restrictions on size and budgets for new housing developments these changes needed to be researched and priced and a compendium of findings was required to inform whether or not the process was viable.
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| South Africa Property: 2008 Year in Review |
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Personalities, trends, opinions that captured attention in one of the toughest trading years many have experienced.
The year got off to a gloomy start, thanks to power cuts and politics. In January, Samuel Seeff, chairman of Seeff Properties, was quick to caution buyers and sellers that the market was unlikely to improve anytime soon. Read the full article on making and losing money in 2008. Meanwhile Gari Dombo, managing director of Alexander Forbes Insurance, urged home owners to review their insurance policies as most insurers do not cover power surges.
In February, emigration talk picked up dramatically. With an abundance of sellers, it was clear that property prices were under pressure. That month, international expert Richard Daskam wrote an article on how to survive the declining property prices. In his article, property tips for declining market, he tells estate agents how to make a killing in the sellers’ or buyers’ markets - pricing, of course, always a key consideration.
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| Houses Outperform Listed Property |
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South Africa's housing market may well be in the midst of the worst slump experienced in 16 years, but residential property as an asset class has delivered better returns to investors this year than JSE-listed commercial property funds.
Latest figures from Cape-based Catalyst Fund Managers show that share prices of the 22 property stocks that make up the JSE's R90bn real estate sector, fell more than 15% for the year-to-date (January to November). Share prices of some counters including the likes of Madison Property Fund Managers and SA Corporate Real Estate Fund have tumbled more than 30%.
Even if the income yield of around 9% offered by listed property is added to the equation, listed property investors still made a loss this year. According to Catalyst Fund Managers, listed property delivered a total return (capital and income growth) for the year-to-date of -8,91%.
In contrast, latest figures from Absa show that house prices are still rising, albeit it only marginally. Prices were up 0,3% in November year-on-year, the lowest growth recorded by Absa since 1992. Absa Home Loans senior property analyst Jacques du Toit expects house price growth for the full 2008 to average 4%.
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| CBD Gets New Tenant Profiles |
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The changing tenant profile within the country's inner city residents reflects a greater degree of stability in this market segment.
But it also calls on owners and building management to reconsider their investment to take cognisance of shifting requirements.
Andrew Schaefer, MD of residential letting and property management group Trafalgar, says inner city dwellers have shifted from transient single-entity tenancies to family units now considering the area as home for the medium- to long-term.
This change prompted a pilot investment into the Helderberg block of flats within the Johannesburg inner city to overhaul a deteriorating building.
The focus with this project was on the family element of the changing inner city profile, meaning the renovations and upgrades incorporated facilities – jungle gyms, a playground, race track and two trampolines – that encourage outdoor activities.
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| Investors Now Hunting for Bargains |
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Prospects for the property market in the next six to 12 months are uncertain – yet investors are starting to hunt for bargains.
Tjaart van der Walt, CEO of the RealNet estate agency group, says the group's agents and franchises countrywide are reporting that investors are very keen to enter the property market before the new year.
"And, as the old saying goes, the smart money buys when the market is at or near its turning point." He adds that most investors are paying cash.
He expects further growth in prices in the low-cost and affordable housing sectors in 2009. "There is an insatiable demand in this sector, which is likely to push prices upwards for the next six months at least. Prices in townships, in particular, seem set to show healthy growth.
"The current discounting in value in the middle segment of the market, where property is changing hands in the range between R700k and R2m, is likely to continue. I expect nominal growth to stay the same or fall slightly for the next few months. At the moment some properties in this price range are selling at anything between 20% and 30% below asking price – and that fact has not escaped seasoned investors."
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| Listed Property Shines in South Africa’s Top Ranking Companies |
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This as calculated by I-Net Bridge and being pitched against companies which are foreign-based, with a secondary listing on the JSE, such as SABMiller, Anglo American, BHP Billiton and Old Mutual. The results were recently published in the Top 100 Companies survey carried out by the Business Times.
Property Loan Stock Association of SA (PLSA) has welcomed the news. Brian Azizollahoff, who heads up the Property Loan Stock Association (PLSA) marketing committee and is CEO of Redefine Income Fund commented: “The Top 100 survey results are a testament to the excellent performance of listed property, particularly during the last year which has presented the industry with its fair share of challenges.” He added that listed property continues to make a positive impression on the South African investment landscape and that the results of the survey are encouraging at a time when sentiment has been uncertain. “Investors can be assured that the fundamentals in listed property are still strong,” he said.
The survey acknowledges those companies that have delivered the most wealth for their shareholders. The rankings are determined as follows: the share price performance of every company listed on the JSE is measured on the basis of R10,000 invested over five years (from October 2003 to September 2008). Companies are then ranked according to their share price growth.
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