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| Seeking Out The Property Bargains |
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With the new National Credit Act and rising interest rates having brought more balance to the Western Cape property market, some 'bargains' can be tracked down in the region
This is according to Chas Everitt International agency principals, who said this week there had been a return to realistic pricing and that good buying opportunities were arising, particularly in cases where higher interest rates had put property owners under pressure.
Dean Meijer of the Chas Everitt International office in Onrus says: “The current market is... favourable for buy-to-let investors who can service their bonds as more people are opting to rent.”
He also predicts a positive turnaround in the market from the middle of next year, “when interest rates will in all likelihood start declining”.
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| Summing Up The Economic Forecast |
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Attendance at the 2007 Annual Rode Conference held last month in Cape Town and Johannesburg broke all previous records
Attendance at the 2007 Annual Rode Conference held last month in Cape Town and Johannesburg “broke all previous records”, according to property economist and conference organizer, Erwin Rode of Rode & Associates.
“For the first time in the history of the conference, we had to turn delegates away,” comments Rode, who once again presented his annual Prognosis for Property.
The popularity of the conference is due in no small part to the calibre of speakers, among them at this year’s event being John Loos (property strategist at First National Bank’s Home Loans Division), Dr Cees Bruggemans (chief economist of First National Bank), Prof Andre Roux (director of the Institute of Futures Research at the University of Stellenbosch), Dries du Toit (of Dries du Toit Consult CC), attorney John Gilchrist (editor of My Mortgage magazine), and Chris Bosch (of Rural Maintenance [Pty] Ltd).
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| Negotiating The National Credit Act |
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Commenting further on the new legislation, Gilchrist was of the opinion that the Act would have no real, long-term effect on the property market
At the recent Rode Annual Conference held last month, John Gilchrist (editor of My Mortgage magazine) described the new National Credit Act as a vehicle with which to “save South Africans from themselves”.
Commenting further on the new legislation, Gilchrist was of the opinion that the Act would have no real, long-term effect on the property market but rather just a short-term period of adjustment and could even work to the advantage of those who had found themselves being turned away from banks in the past.
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| East London Has Fastest House Price Growth |
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East London hasn't really featured on the radar screens of residential property investors in recent years, as the Eastern Cape city struggled to compete with the level of returns offered by its Gauteng and Western Cape counterparts
But that scenario is changing fast. In fact, Absa's latest housing overview shows that East London recorded the fastest growth in house prices (medium-sized) of all South African cities in second quarter 2007. East London house prices were up 23,3% (year-on-year) and it was the only South African city that recorded growth of more than 20% in second quarter 2007.
The latest rental index of property letting group Trafalgar shows a similar trend. East London flat rentals are powering ahead of the national average, with rentals up 13% in the year to end-June 2007 - compared to growth of around 8% for South Africa overall. East London just pipped Johannesburg to the post in the rental growth stakes.
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| Social Drivers Affect South African Property |
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Last week Prof Francois Viruly of Viruly Consulting gave his opinion on the impact of economic drivers on SA's property market, this week he explores how social drivers affect it
Last week Prof Francois Viruly of Viruly Consulting gave his opinion on the impact of economic drivers on SA's property market, this week he explores how social drivers affect it.
This brings to the fore the question of whether we are going to see more high or low-income areas in townships," he says.
Viruly says that many years ago he confidently divided people into those associated with commercial property and those associated with residential property. "Increasingly these markets are getting closer and closer. The Melrose Arches of this world are examples of where these components are integrating.
"The next issue we have to ask ourselves is how will we start with this in townships? Are we going to move into the next frontier which is going to see townships with swimming pools and more amenities? I believe that we will see a middle class in the township environment and I wouldn't be surprised if we move into that particular direction, i.e. a complex with a swimming pool."
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| South African Property Feels Economic Drivers |
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Economic drivers seem to have a big impact on South Africa's property market
So says Prof Francois Viruly of Viruly Consulting, who adds that we have a changing environment around us from a property perspective.
"Our inflation rate is 6% and our gross domestic product (GDP) growth is 4% to 5%. But that's not that interesting. Stoep talk is interesting or anything you can't find on Google."
On an economic level, Viruly says a few large institutional investors previously determined what happened in the property market but that that has changed fundamentally.
He also points out that the new cities of gold are not places that people would normally associate with a booming property market, but that that is where they go wrong. "With the way the platinum market and commodity prices are going at the moment, the cities of gold are critical and do matter."
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| Residential Prices Outrun Rentals |
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Residential rentals have not remotely kept up with house-price growth over the last few years
According to surveys conducted by Rode & Associates, rentals of flats, townhouses, and houses generally grew at a compound rate of roughly 4–8% over the last three years. This should be contrasted with a compounded national house-price growth rate of 19,3% p.a. over the same period. The result of this divergence in growth rates is, of course, the low net-income yields of 4-6% that residential investors currently face.
On the positive side, however, residential rentals did generally beat consumer inflation, which averaged about 4,5% p.a.
Some of the better-performing markets included the Durban house market where rentals grew by 12,9% p.a., Port Elizabeth’s flats (11,2%), and Bloemfontein’s townhouses (10,4%).
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| South Africa Set to Follow International Worst Practice |
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A report presented recently to Cabinet on the development of policy on foreign land ownership is sure to draw much public debate
Following the recent, long-awaited presentation to Cabinet of a report on the development of policy on foreign land ownership, Cabinet has now called for a comparative analysis of policy in other countries to be included in the report before it is submitted for wider public debate.
Ranging from recommendations dealing with a total moratorium on the sale of all land to foreigners, to the more tempered suggestions that special ministerial approval be sought in cases where certain categories of land are considered for disposal, the report - when it goes public for debate - will include "examples of international best practice" according to government spokesperson Themba Maseko.
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| Foreign Buyers Do Not Influence Affordable House Prices |
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Sales to foreign investors of free market properties can influence top end property prices, but have no effect on the affordable end of the market
So says Barak Geffen, Executive Director of Sotheby’s International Realty South Africa who says statistics from South America’s property market shows despite high average house prices, foreign investors do not affect the price of affordable homes in that market.
Figures show Brazil’s shortage of affordable housing is far worse than SA and growing.
“Brazil has government legislated financial mechanisms in place to relieve pressure and build more affordable housing.
“About 20% of its wage bill is put into a UIF fund and of which 65% must be spent on housing either directly by providing home loans or by lending to developers.
“Brazil’s population is about 185 million and the shortage of formal housing stock is about 8-million housing units or 14% of the total market requirement. In South Africa where the population is about 44 million we have a shortage in this segment of 2,6, which is acute but not as bad as the Brazil model.”
| Sotheby’s International Realty, 13-08-2007 |
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| Major Facelift for Johannesburg |
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Plans in pipeline for high-rise blocks in posh neighbourhoods
The plans, tabled in three proposals before the Joburg council late last month, under the Urban Development Framework document, have been put in place to ensure the success of Gautrain and the city's R2-billion Bus Rapid Transport System.
The documents contain the council's vision for Sandton, Rosebank and Marlboro, all of which will have Gautrain stations. The plans, which were passed by the council, will now be subject to a public-participation process at a council sitting on July 26.
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