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| Higher Interest Rates to Weigh on the Housing Market |
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Property Trends - Mortgage Advances
Volatility in
the rand exchange rate and international oil prices, together with increasing
inflation,
prompted the further increase in interest rates. PPI inflation surged to 10% in October
(9% in
September), while CPIX inflation came in at 5% in October (5,1% in September).
Other factors
which also contributed to the higher rates include record-high levels of
household debt as a
result of continued strong growth in private sector credit extension
(27,5% year-on-year (y/y)
in October), largely driven by mortgage advances growth of
30,9% y/y; the huge trade deficit
of R12,9 billion in October, which will contribute to the
current account deficit remaining at
a level of above 5% of GDP in the fourth quarter; buoyant manufacturing production and retail
sales growth, which confirmed that demand is still resilient; and relatively strong real GDP
growth (4,7% at a seasonally adjusted annualised
rate) in the third quarter.
| Absa Group Economic Research, 07-12-2006 |
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| Declining Trend in House Price Growth Continues |
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Property Trends
Nominal house price growth has been in a downward phase for the
past two years after peaking at 35,4% year-on-year in October 2004. In November 2006, nominal
price growth of 12,7% year-on-year was recorded (13,3% in October). The average price of a house
in the middle segment of the market (see explanatory notes) came to R841 000 in November. The
average nominal growth in house prices was 14,6% year-on-year in the period January to November
this year.
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| Affordability of Property is Key |
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It seems affordability is a key factor in the market with the lower-end being the star performer
The South African residential
property market has slowed down somewhat in the last year, but there has been increased
confidence in the lower-end of the market, with investors buying homes which are affordable,
rather than those in the top bracket which are over-priced. Upper-top-end property sales have
been good and bad — there has been a lot of foreigner spending here and we expect to see a good
year ahead, but the top-middle-end has not been as vibrant, with few buyers chasing the market.
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| Property Sales Still Booming |
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Property barometer lists the best and worst performing price growth suburbs
Properties worth nearly R19bn in the price
bracket below R2,5m each were registered at the Deeds office last month.
This is the second
highest level since a peak in November 2005, when the value of properties registered was
R19,8bn.
“Activity like this shows the property market is not cooling,” said Ed Grondel, FNB’s
CEO of Homeloans.
In spite of the latest rate increase, he continued, the residential property
market has remained relatively stable.
“The rate hikes have been absorbed and have had little
impact on market activity and sentiment,” maintained Grondel. He attributed positive market
sentiment to the summer months and more realistic property prices.
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| Garden Route Now A Buyers Market |
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This season we can expect a wave of savvy investors looking for bargain holiday homes along the Garden Route as serious sellers begin re-adjusting prices to fit the market
Tim Kirby of Lew Geffen Sotheby's International Realty in George reveals stats drawn from SAPTG for the periods January - August 2005 and compared these with the same period for 2006. George is 27,78% down on number of transfers, Wilderness is 37,14% down and Great Brak River is 45,42% down. These figures are echoed in Plettenberg Bay with registered transfers down by 25% this year.
"Three exclusive gated country estates we are currently marketing in George - Oaklands Bridge, Cherry Creek and Soeteweide – all offer outstanding value, with stands starting at R489 000, and as a result these have sold out relatively quickly. On all three estates, just outside of the George's CBD, spacious new homes are now under construction starting in the early R2 millions and we have seen similar demand for these properties.
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| Victoria & Alfred Waterfront Gets $1bn Boost |
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The Dubai World and London & Regional Properties consortium has announced plans to invest more than US$ 1 billion in the V&A Waterfront over the next four years, following its successful purchase of the development last month
The consortium has outlined a three-stage development strategy which will see improvements to the Waterfront starting immediately.
The first stage, over the next six months, will see landscaping and beautification measures, additional car parking space, commercial facilities and improvements to pedestrian access to the area.
The second stage, over the next three years, will ensure the V&A Waterfront is one of the highlights of the World Cup 2010, with the development of new hotels and resorts, creation of promenades, and entertainment areas, marinas, new shopping developments and new apartments and offices.
The third stage will see the development of new facilities to consolidate V&A Waterfront’s status as a leading global resort, with potential elements including a new yacht club and further marina development, a cruise ship terminal, a train station and improved connections to the airport.
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| Waterfront Sale - What Comes Next? |
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The sale of Cape Town Waterfront to a foreign group raises interesting questions about the issue of foreign property ownership
The V&A Waterfront Holdings linked unitholders – namely Transnet and its
pension funds Transnet Second Defined Benefit Fund, the Transnet Pension Fund and the Transnet
Retirement Fund (TRF) – have wholly sold The Victoria & Alfred (V&A) Waterfront to the L&R
Consortium for a cash price of R7,04 billion.
More than 60 South African and international companies took part in the bidding process.
The consortium, which was selected from nine short-listed bidders based on the evaluation criteria published in May 2006, is a South African company made up of a broad spread of local and international shareholders led by the UK-based London & Regional Group Holdings Limited (L&R Group).
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| Developers Opting for Eco-Estates |
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As the government cracks down on lifestyle developments in concern over their ecological effects, an eco-friendly breed of developer has emerged who is investing and assisting in preservation of wilderness areas
Lifestyle estates, particularly those of a golfing nature, have come into question recently for
putting local water resources under pressure and disrupting natural areas within South Africa.
The latest Absa residential property perspective for the second quarter of this year showed that
about 32 proposed residential estate projects were awaiting final government approval.
On a R2bn Val de Vie Polo and Wine Estate, situated in the Berg River Valley between Paarl and Franschhoek, agriculture and mining altered and destroyed much of the natural vegetation of the valley prior to the developments commencement. Small remnants of original vegetation could be found mainly along the Berg River which forms a boundary along the southern side of the estate.
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| Is Local Government Stifling Development? |
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While there is clearly a need for responsible local authority control of property development, there is also a real danger of disruption of the market
Nobody would argue with the need for municipalities'
to police compliance with building standards and safety regulations. Also, there is now
widespread acceptance by developers of the need to pay for their own infrastructure and provision
of services in terms of roads, water and electricity.
However, leaving aside the impact of
such self-provision on the selling prices of property for the moment, and accepting the fact that
municipal resources need to be re-allocated to redress historic imbalances, developers should
nonetheless not have to deal with uncertainties in terms of municipal regulations and
policies.
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| Wozani Ridge Coastal Estate News Release ~ Kwazulu Natal South Coast an Investors Dream |
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Popular beach areas on the KZN South Coast such as Margate and Uvongo are already an investors' dream but savvy buyers are increasingly looking to areas further north, such as Port Shepstone and Hibberdene
This is the view of Karen Anderson who has just opened a new Aida franchise serving these areas, who says prices are more reasonable on the northern stretch of the "Hibiscus Coast" - and relatively cheap when compared to properties in, for instance, Uvongo.
"Hibberdene especially is about to explode with new business, residential and other developments. There is a discernible growth in demand and enough development land to satisfy this growth for the foreseeable future.
"An existing supermarket was recently upgraded and enlarged and there are already plans in the pipeline to build another store belonging to a different national chain.
| Wozani Ridge Coastal Estate News Release, 26-05-2006 |
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