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| South Africa Down in Global Home Price Ranking |
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South Africa now ranks 16th among 46 countries in terms of global house price performance, figures released this week by UK property group Knight Frank show.
In 2005/2006, when SA house prices were still racing ahead at 30% plus/annum, SA was rated by Knight Frank as the world's best-performing housing market. However, in first quarter 2009, SA for the first time joined the ranks of 31 other countries where house prices are now falling.
The Knight Frank Global House Price index, which uses Absa's data for SA, shows that SA house prices slipped into negative growth territory for the first time since 1986. But SA's dip of -0,3% in first quarter 2009 (y/y) is nowhere near the falls of between -16% and -36% recorded in places like the UK, US, Singapore, Dubai and Latvia over the same time.
According to Knight Frank 15 out of the 46 countries tracked in its housing index were still recording increases in first quarter 2009. Israel led the pack with prices up 10,9%, followed by the Czech Republic (9,9%), Jersey (6,9%), Switzerland (5,6%) and India (5,1%).
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| Technology Boosts Property Sales |
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Estate agents say technology is playing an increasing role in the residential property market, especially in a buyers' market with prices dropping and purchasers spoilt for choice.
This week The Tribune canvassed agents on the use of technology and all said the internet, internal listing systems, and access to Deeds Office data and municipal rating information were critical for information-hungry buyers.
Chris Tyson of Tyson Properties said his group had invested heavily in technology by designing "the finest back-end system available to agents".
Tyson Properties received more than 300 web inquiries a month.
Mike Bennett, MD of ProProp said his company had tried to install "all the gizmos, from palmtops to laptop computers" and had found the most cost-effective way of using technology was to have a good internal listing system.
"We find we get a good response from web pages for the R1 million-plus market, which probably accounts to 10% of our sales."
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| Now For The Good Property News |
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Property trend analysts are impressed that in the first week of April mortgage loans granted in the US were 77% up on the April 2008 figure.
A similar, though not quite so spectacular, rise was recorded in the UK for the same period.
Drawing attention to this very welcome turnaround in the current situation, Tony Clarke, MD of Rawson Properties, asked the question: "Does this indicate that the recovery has begun? If one accepts the old maxim that USA and the UK set the economic patterns for the world, is it possible that in South Africa the long-awaited revival is not far off?"
Clarke said that although historically it has been accepted that there is a lag period of six months before the SA economy is influenced by the US/UK market, the latest ABSA figures show that, in real terms, the declines in South African house prices have been nowhere near as drastic as those of the US and UK markets.
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| Cape Town Mixed-Use Estate Expands |
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The final phase of a commercial and residential estate in Cape Town's Tygervalley has been launched.
Development started four years ago at Bella Rosa Village on four hectares of previously unzoned land along Durban Road. Now the final stage - offices and retail space - is being offered for sale or rental.
"Both the concept of the development and the partners in the project are first rate, which has been demonstrated by the popularity of the development so far," said Sarita Edwards, sales and leasing manager of Propergation Estates.
The land on which Bella Rosa now stands was bought ten years ago. The Italian village design has drawn high-net worth corporations and individuals who now occupy the office buildings and residential apartments.
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| World Cup 2010 to 'Boost South African Growth' |
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A leading economist says a recent estimate of a 0.8% boost to South Africa's gross domestic product (GDP) thanks to the football World Cup is conservative as the impact should be higher than this.
Chief economist at Econometrix, Dr Azar Jammine, said on Thursday that South Africa is unique in the world thanks to hosting the 2010 Fifa World Cup.
He notes that German GDP improved 2% as a result of hosting the last event and their economy is eight times the size of South Africa.
"A reversal in the decline in foreign tourism is likely - the semi-finals and finals are already sold out. It is mind-boggling what that will do for our economy," says Jammine.
"I think the effect will be higher than 0.8% of GDP."
"No one else has got that and the beauty of this is that it has got our infrastructure investment going long before other countries," says Jammine.
"Our momentum of infrastructure spending is rapid," he adds, saying that other countries are only now talking about investing in this area, while SA is already implementing building.
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| SAPOA/IPD South Africa Annual Property Index |
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Results for the year to 31st December 2008
The nominal returns were sharply down on the 27.5% recorded in 2007, and the lowest in six years. This performance is nevertheless the highest in the IPD indices for all countries published to date and contrasts with the pattern seen across Europe, particularly in the UK and Ireland, where capital values plummeted last year due to yield rises across all sectors. The nominal total returns for the UK and Ireland in 2008 were -22.1%, and -34.2%, respectively.
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| Rate Cut Vital to the South African Property Sector |
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The South African Reserve Bank's monetary policy is now hopelessly conservative and a significant drop in interest rates is essential to the property sector in particular.
So says Ivan Neethling, chairman of the Western Cape branch of the Institute of South African Estate Agents (IEA), who adds that "the release of the dismal fourth quarter, 2008, GDP figures should, in many people's view, have stirred the South African Reserve Bank into action and made them realise that they cannot delay an interest rate cut any longer".
A minimum cut of 2% followed by further cuts in mid-year, said Neethling, had been expected not only by the property sector but also by many economists and the business community as a whole.
"It does appear that the cries of ordinary South Africans, the business sector and leading politicians are falling on deaf ears. Mr Mboweni, it seems, is so determined to fight off the international credit crisis by keeping interest rates high that he is prepared to let the economy shrink further.
| Institute of South African Estate Agents (IEA), 24-03-2009 |
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| Commercial Property Investments Perk Up |
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Interest rate cuts have made commercial property investments more attractive, and according to an expert, the market is now ripe for investors looking to increase their exposure.
Don't wait until the full effect of the current interest rate cutting cycle has worked its way through the economy, before investing in commercial property, advises Craig Hallowes, spokesperson for the Association of Property Unit Trusts (APUT).
The perspective is that, while South African consumers have already seen a 150 basis points cut, some financial institutions expect another 200 to 300 basis points in the pipeline before the end of 2009. Hallowes suggests that much of this anticipated decrease in interest rates is already priced into the market. He points out that the bond and forward rate agreement market tend to be more efficient than the property market when it comes to pricing because property has a growth and expectation value to it, which is a little less easy to price. However, all the markets are predicting a significant drop in interest rates.
| Association of Property Unit Trusts , 10-03-2009 |
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| Mortgage Advances Growth Slows |
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The year-on-year (y/y) growth in the value of mortgage advances by monetary institutions (the total net outstanding balance on mortgage loans at these institutions) slowed down to 11,9% in January 2009 from 13,2% in December last year, based on data released by the South African Reserve Bank.
This was significantly lower than the 24,5% y/y growth in mortgage advances in January last year and was also the lowest growth rate recorded since May 2003 when it was at level of 11,9%. On a month-on-month basis the growth in net mortgage balances outstanding was only 0,1% in January, down from 0,4% in December.
Growth in mortgage advances to the household sector, largely related to residential property, was at a level of 9,9% y/y in January 2009. The amount of outstanding mortgage balances in the household sector was R700,7bn in January, with a share of 72,4% in total mortgage debt, which includes both residential and commercial mortgages.
Household mortgage advances had a share of 69,6% in total credit extended to the household sector in January 2009.
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| Property Industry Likes Budget, but… |
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The South African property industry's executives overwhelmingly approved of the Budget that was announced on Thursday, but there are also certain reservations.
Finance Minister Trevor Manuel is to be lauded for encouraging banks to extend credit to worthy customers as it has become apparent that generally, financial institutions are currently going beyond even the bounds of the stringent NCA regulations.
So says Dr. Andrew Golding, chief executive of Pam Golding Properties (PGP), who adds that another budget boon to home sellers is the raising the Capital Gains Tax (CGT) exclusion on the sale of a primary residence from a gross value of R1,5m to R2m – ie. those who sell their primary residence for less than R2m will not be liable for CGT.
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