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| Obama Election Holds Promise for South Africa |
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The runaway election of Barack Obama as President of the USA could be good news for the South African economy and South African property investors.
"Those of us who have watched this election campaign have been encouraged by a whole number of factors," said Greeff. "Firstly, Obama appears to understand more clearly than his predecessors the causes of the USA's economic woes and he gives the impression of having worked out the drastic reform measures needed to put matters right. That in turn means that by 2010 - if not sooner - the USA economy should be into a full-scale recovery based on far sounder save first - spend later principles.
"Secondly, Obama is very definitely more aware of Africa and of the Third World's predicament than any previous president. This, I believe, will result in greater global awareness, particularly of poverty, AIDS and the dangers of insurrection throughout Africa and will lead to increased involvement by all First World countries in this area once the present global economic problems are behind us.
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| Finding the Best Financial Advice |
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The global market crunch coupled with tighter credit controls locally means anyone considering accessing their home loan to renovate their home, consolidate debt or further their loan should get sound advice before doing so.
Bond Choice mortgage originators CEO Mark Beckett says that the international credit crunch will have a ripple effect on the South African economy for the foreseeable future. Beckett says it has been the forethought of the National Credit Act that has shielded South Africa from the worst of the global credit crunch by reining in people's ability to live off credit and over-extend their commitments.
Bond Choice head of direct business initiatives Rory Conacher says that in the past few weeks the country's leading banks have further tightened their lending criteria. ABSA and First National Bank, specifically, have amended their policies on allowing clients to draw cash from their home loans in a bid to manage their risk.
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The green writing is on the wall and pretty much everywhere else in buildings. This was the clear and succinct message from the Green Building Council of South Africa's (GBCSA) inaugural conference held at the Cape Town International Convention Centre (CTICC) from 2-4 November 2008.
Delegates and experts from all over the world attended the conference that set the tone for South Africa's green building future, but a particularly telling sign of the amount of interest in this trend was the large number of local stakeholders that were present.
Rick Fedrizzi, president of the US Green Building Council and keynote speaker at the conference, painted an alarming yet compelling picture of the reasons behind the momentum of the global green building movement.
"Forty percent of all the greenhouse emissions stem from buildings, and not from cars as many people would assume. Buildings are therefore the largest source of greenhouse emissions in the world.
"Moreover, cities around the world are growing exponentially and the end-result could be devastating if something isn't done.
| Green Building Council of South Africa, 06-11-2008 |
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| Is an upturn really on the way? |
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With agents reporting increases in show house activity, and economists lauding the slowing of demand for credit, it's easy to believe that rock-bottom has been reached and the upturn has begun.
With a number of estate agents reporting sudden increases in show house activity, and the economists lauding the slowing of demand for credit, it's easy to believe that rock-bottom has been reached and the upturn has begun.
However, the country needs to take account of a number of factors before assuming the worst is over, says Mike Bester, CEO of Realty 1 International Property Group.
"It's not clear what the basis is for this enthusiasm," says Bester. "Until interest rates start to come down, the NCA's affordability criteria remains the single largest obstacle to accessing home finance, and many buyers simply don't have the necessary deposit to qualify for a mortgage."
This means the property market is unlikely to turn just yet. Although there is increased demand for rentals, he says, this is only good news for those landlords whose bond repayments are low enough to make renting viable – usually investors who owned their properties for some time before the downturn.
| Realty 1 International Property Group, 05-11-2008 |
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| Caution on Negative Property Equity |
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The South African Reserve Bank (SARB) cautioned on Thursday in its latest Financial Stability Review that a possible impact on financial stability of the weaker property market could be felt through negative equity.
This would occur as some sellers are selling their properties at prices equal to or below their earlier purchase prices.
"Since properties are usually used as collateral when acquiring credit from financial institutions, negative equity erodes the value of that collateral and therefore, if widespread, can be detrimental to the stability of the financial system," explained the SARB.
It noted that confirmation of slowing residential property market activity came from the fact that the market continues to be a buyers' market.
The SARB said that the number of properties sold below asking price increased to 85% in the second quarter of 2008 (from 82% in the previous quarter) and 82% of properties remained in the market for three months or longer.
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| South African Homeowners not in Storm Alone |
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Hard-pressed South African homeowners at least have the consolation of knowing that they are not alone in battling with a poor property market and that inevitably conditions will improve.
That's the view of Mark Friend, vice president of Realogy Holdings, the holding company for a number of leading real estate organisations including ERA.
On a recent visit to South Africa to meet with agents and management of the ERA South Africa group, one of the most successful of the Realogy associate companies, Friend said tough local conditions mirrored the rest of the property world.
His areas of responsibility include Australia, Africa and Asia. His perspective on the markets of these regions is therefore based upon first-hand experience.
"The drivers in these respective markets are uncannily similar, driven mainly by poor business conditions, credit restrictions, high interest rates, mounting inflation and declining consumer disposable income.
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| Value of Building Plans Passed Down |
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The value of recorded building plans passed by larger municipalities at current prices during January to August 2008 decreased by 3,6% (-R1,997m) compared with January to August 2007.
Decreases were reported for residential buildings (-11,4% or -R3,467,800) and additions and alterations (-0,8% or -R114,4m).
These decreases were partially counteracted by an increase reported for non-residential buildings (15.1% or R1 585,2m).
Six provinces reported decreases in the value of building plans passed. The biggest contributor to the decrease of 3,6% was Gauteng (contributing -3,6 percentage points or -R1,997,600), followed by Western Cape (-1,8 percentage points or -R992,4m) and Eastern Cape (-1,8 percentage points or -R975,6m).
However, KwaZulu-Natal counteracted these decreases to a certain extent, increasing by 4,4 percentage points (R2,439m).
The real value of recorded building plans passed by larger municipalities (at constant 2000 prices) during January to August 2008 decreased by 14,9% (-R4,800,800) compared with January to August 2007.
| Statistics South Africa, 17-10-2008 |
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| Latest oobarometer reports 3,4 percent annual rise in house prices |
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The latest ‘oobarometer’ price index, first launched by ooba in July this year, showed that average house prices have risen 3,4% in the month of September 2008, year on year.
The oobarometer also found that the average purchase price in September jumped 2,4% from August 2008 bringing the price rise since July 2008 to 1,6%.
The oobarometer recorded price declines in both July and August. September is the first price rise. With residential property sales down around 50% year on year, it is too early to say if this marginal growth in average house prices suggests prices will start rising. It is anticipated that the index will show low or negative growth in future months. With the significantly reduced transaction volumes in the residential market, the transactions mix may also be influencing the price data and increasing volatility.
Saul Geffen, chief executive of ooba, said that the average purchase price in September this year was R794,977, compared to R768,557 in the same month last year, a rise of 3,4%.
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| What are your offshore options? |
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Many South African property investors are now looking overseas to diversify their property portfolios while others are looking for emigration options.
Mariana Tolken, managing director of offshore property investment specialists, Gas Properties, provides an overview of five international property investment destinations.
Busy and bustling, wealth is largely on display in the vibrant city of New York. Not in the form of big expensive cars (only 20% of New Yorkers have such), top villas or over-the-top jewelled older ladies.
The wealth here is wealth of generations of investment tradition and the wealth of financial planning and preservation. For such people, the difficult financial situation in America of the moment is holding up and they are actually benefiting from this chaotic credit time.
Different destinations offer very different opportunities for property investment. And it is really important to know what it is you want from an offshore property investment.
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| Developers Offer Cheap Deals |
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Bargain buying opportunities are starting to appear on the market, particularly in new sectional title projects, as it becomes increasingly expensive for developers to keep unsold stock on their balance sheets.
For instance, in the northern suburbs of Johannesburg well-established sectional title developer Summercon is now advertising new studio, one and two bedroom apartments at average selling prices of R10,500/m2.
A search on real estate portals such as Landsdowne Investment Properties and Property Bargain Finder shows a number of new Johannesburg developments with asking prices of less than R10,000/m2.
That is significantly lower than the R15,000/m2 to R30,000/m2 that new sectional title stock was generally selling for in the northern suburbs of Johannesburg 12 to 18 months ago.
Summercon sales director Peter Blanckenberg confirms that pricing has become increasingly competitive, with the substantial slowdown in sales activity forcing developers to absorb building cost increases.
In fact, developers have not been able to pass building cost increases on to buyers for the past two years, says Blanckenberg. He notes this has created great pricing for investors and makes it a good time to increase one's exposure to the buy-to-let market.
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