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| 2010 FIFA World Cup - Opportunities and Pitfalls |
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The 2010 FIFA World Cup South Africa has become the driver for infrastructural change within our country, the upgrading of Eskom, the announcement of new and upgraded airports and lots more
Leading up to 2010, the government has committed to an infrastructural investment of R410 billion and during 2010, visitors will spend over R10 billion in just 4 weeks. This event is about more than four weeks of soccer, it is also about the impact that it will have on all business sectors, pre- and post the event. No sectors will be more influenced than that of the property and construction industries.
Plenty of opportunities will arise for both sectors, which will lead to significant profits to be made – if, however, a conservative and sensible approach is taken. Consider the projected billions that will be spent on upgrading, improving and creating new infrastructures leading up to 2010 on projects such as the Gautrain and five magnificent stadiums being built in major cities around South Africa – all signs that construction is definitely experiencing a boom. Even after 2010, Coega will be fully underway, the mining industry should continue showing growth.
| Madison Property Fund Managers - Property Innovation, 20-03-2007 |
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| Soaring Cape Property Prices |
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Anyone sceptical about Cape Town residential property’s ability to continue to increase in value well ahead of the inflation rate should take a look at the sales figure for February
February sales are up year-on-year by 19.6 percent, giving a total sales figure for the greater Cape Town area of around R1944-billion.
Equally impressive is the fact that the average sales price in the greater Cape Town area is now R1.58-million, which is almost double the national average, now hovering around the R820 000-mark.
These figures are likely to be further improved in March which is on-track for being an all-time record month for Cape residential property.
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| House Price Trend Growth Increased Further |
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Property Trends - House Price Index
According to the latest Absa House Price Index, nominal year-on-year growth in house
prices, which appears to have levelled out in the third quarter of last year, increased further
in the early months of 2007. This development is also supported by relatively strong
growth in transaction volumes during January and February this year.
In February, nominal house price growth of 15,4% year-on-year was recorded in the middle
segment of the market (see explanatory notes), compared with a revised growth rate
of also 15,4% in January. This brought the average price of a house in this segment of
the market to about R891 700 in February 2007.
| Absa Group Economic Research, 07-03-2007 |
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| Property Prices Recover, But For How Long? |
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The average price of a house is now going for about R891 700
The latest data on residential property prices show that growth has increased slightly but banks warn that it will level off again later this year.
According to Absa’s House Price Index (HPI), nominal house price growth was 15,4% year-on-year for February. A revised growth rate of 15,4% was also recorded for January.
This brought the average price of a house to about R891 700 in February 2007.
In December 2006 nominal house price growth of 13,5% year-on-year was recorded, down from a revised growth rate of 14% in November.
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| Growth in Mortgage Advances Still Strong |
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Property Trends - Mortgage Advances
According to data released by the South African Reserve Bank, mortgage advances by the monetary sector increased by 30,1% year-on-year in January 2007. This brought the total amount of mortgage advances to R694,1 billion in January.
Taking into account the continued strong year-on-year growth, which has been around
the 30% level since March 2006, the 200 basis points worth of interest rates hikes since
June last year appear to have done little to curb mortgage advances growth. However, on
a month-on-month basis, mortgage advances growth edged gradually lower from 2,5% in
October last year to 1,4% in January this year. This could be an early indication that the
higher interest rates are starting to take effect and that year-on-year growth in mortgage
advances is set to move to lower levels in coming months.
| Absa Group Economic Research, 01-03-2007 |
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| KwaZulu-Natal Could Be The Place To Invest in Property |
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KwaZulu-Natal is expected to have the best capital growth in its housing market
Gauteng and the Western Cape may be the country’s prominent property markets but don’t underestimate the capital growth in KwaZulu-Natal (KZN).
This is the view of John Loos, property strategist at FNB.
He expects that, of the three major provinces, KZN would have the best capital growth in its formal housing market, over the long term.
“The poor rates of building completion support this view,” he added.
KZN appears to have the biggest supply constraint of bringing new units to the market; this may have to do with land availability, which will ultimately affect price growth, reckoned Loos.
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| Property Industry Welcomes Budget |
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Players in the property industry have welcomed Finance Minister Trevor Manuel's Good News Budget
In addition, R11 billion will be spent on social housing, while teachers' salaries are to increase by R8 billion. Both these factors will boost the property market, because teachers, as a consumer segment, are a very important house-buying segment.
This is indeed a good news budget by any standard. Government expenditure, coupled with powerful economic growth and tempered inflation will augur well for house sales and rises in house prices during 2007 and beyond.
In turn, rentals continue to rise at more than 8% per annum. This will assist investors who are currently required to subside costs of property by as much as 30%, in the form deposits, in order to break even.
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| Western Cape Housing Given Massive Boost |
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Western Cape premier Ebrahim Rasool has announced a massive cash injection into social housing in the province
Delivering his State of the Province speech today, Rasool said the provincial government had to tackle a backlog of 400 000 houses, and in order to facilitate delivery of this vital service, the provincial government had increased the housing budget from R530-million to R1.2-billion.
Rasool's announcement followed hard on the heels of a speech by health minister, Manto Tshabalala-Msimang, to the parliamentary press corps yesterday in which she reported on plans for the government's social cluster that includes housing and health portfolios.
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| Beach Properties Test New Highs |
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Property punters who put money into undeveloped coastal land in recent years have reason to feel rather chuffed with themselves
Prime land values have generally doubled over the past two to three years in many coastal cities and resort towns, whether that's in Clifton or Cape St Francis.
And most industry players expect coastal land prices to continue to outpace general house price growth over the next few years as undeveloped land with good beach access and views becomes increasingly scarce.
Estate agents say it's already hard to find a vacant beachfront stand anywhere on South Africa's coastline for less than R2m. Buyers can now expect to pay anything between R1 500/m˛ and R6 500/m˛ for prime sea view sites.
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| Regulator Will Ensure National Credit Act Promotes Fair Access to Credit |
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Concerns have been expressed that the National Credit Act (NCA) — which has been gradually enacted since 1 June 2006 and will come into full effect on 1 June 2007 — will hamper economic growth and housing development in unintended ways
Some housing developers fear that financial institutions will be setting unreasonably strict requirements for applicants to qualify for project finance, while others worry that the checking of the credit exposure of future borrowers required by the Act will be a protracted process that will slow down home-loan approvals, resulting in lost sales.
In response to these concerns, the National Credit Regulator (NCR), which was established by the NCA in June last year, gave the assurance that countering concerns through educating the credit applicants about their rights and the implications of the Act, investigating and solving complaints and settling disputes, were precisely what the Regulator has been tasked to do.
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