Residential property activity improves

16 Jan 2014

According to the FNB Estate Agent Home Buying Survey Q4 2013, the residential property market in South Africa has strengthened.

The report reveals that 34 percent of agents expect activity to increase in the next three months, down from 61 percent in Q3, while 48 percent expect it to stay the same and only 18 percent expect a decrease in activity.

This rising trend in the activity rating through 2012 and 2013 has been more gradual than the short sharp growth surge of 2009/10 (the 2009/10 surge being driven by huge interest rate cutting at the time), which tapered off relatively quickly in 2011.

The report reveals that 34 percent of agents expect activity to increase in the next three months, down from 61 percent in Q3, while 48 percent expect it to stay the same and only 18 percent expect a decrease in activity.

Along with the gradually rising activity trend, agents also saw a broad improvement in the balance between demand and supply in 2013, explain report writers John Loos, FNB Home Loans household and property sector strategist and Theo Swanepoel, FNB Asset Finance property analyst.

Agents point to stock constraints and these are reflective of building activity, which has remained relatively weak in recent years.

According to the report, 16 percent of agents surveyed cited stock constraints as a factor influencing their near-term expectations – higher than the 15 percent in the previous quarter, noting that 2013 was more constrained than 2012.  

Loos and Swanepoel say according to the agents, it takes 15 weeks and one day to sell a house compared to 14 weeks and five days in Q3 3013.

The market still has a lot of unrealistic sellers with 85 percent having to drop their asking price in order to sell (88 percent in the third quarter) and this figure was 30 percent in early-2004.

When agents were asked to estimate the average percentage asking price drop on those properties where a price drop is required to make the sale, this remained at -9 percent (-13 percent in 2011).  

On property affordability, the percentage of agents who perceived income levels to be far behind house prices declined from 21 percent in the preceding quarter to 12 percent in Q4 2013.

Those perceiving income levels to be a little behind house price levels rose significantly from 33 percent in Q3 to 48 percent, implying that the percentage of agents believing that income levels have kept up with prices declined from 46 to 40 percent over the two quarters, say Loos and Swanepoel.

It is too early to ascertain whether the decline in those perceiving income levels to have kept up with prices in the Q4 is the start of a deteriorating affordability trend.

“Given no further interest rate cuts in 2013, weak economic and wage bill growth, and our FNB House Price Index showing accelerating growth late last year, it is entirely possible that we may be entering a period of deteriorating affordability, after an improving trend dating back to around 2009,”  according to the writers.

On average property prices over the next 12 months, 21 percent of agents reckon prices will increase by 5 percent, 15 percent of agents expect between 6 and 8 percent, 12 percent a 10 percent rise and only 6 percent anticipate over 10 percent growth. – Denise Mhlanga (Property journalist at property24.com)

Joint bond ownership pros and cons

Those who lack savings but want to buy a home for themselves should seriously consider the advantages of bringing in a partner or partners to be joint bondholders. This ‘alternative’ means of securing a bond is not frowned on or discouraged by the banks and these days is increasingly used because people are cash-strapped.

Those who lack savings but want to buy a home for themselves should seriously consider the advantages of bringing in a partner or partners to be joint bondholders.

This is according to Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, who says the banks actually quite like having joint bond debtors as this, it has been found, reduces their chances of being let down on the bond payments.

He says they will in these arrangements take into account the joint incomes of all who apply for the bond and this will in many cases help those who are actually going to live in the home to upgrade and move into a property better than they would normally have been able to afford.

Van Alphen says this is increasingly used by couples or friends who agree to live together, either because it is convenient and inexpensive or because they are now in a relationship but not yet married.

When joint applications for bonds of this kind are approved by the banks, those who are signatories to the arrangement are always assumed to be equal shareholders in the property. If this is not the case (e.g. if one partner has 50 percent of the property and the other two 25 percent), the exact shareholding of each has by law to be stated in the Deed of Sale and will be registered as such at the Deeds Office.

Furthermore, it should be realised by those entering into such agreement that joint bondholders by law have to accept that they are responsible for the total monthly bond payments. If one of their partners defaults on his monthly payments the others can and will be held responsible for covering the amount owing in addition to the sum that they themselves have to pay in.

Van Alphen says quite often, one of the partners/joint bondholders will at some stage want to sell his share, possibly because he or she is getting married or going overseas. In many partnership deeds there are stipulations that this will be done after a specified period of years, but often, an option is left for the joint owner to continue as a partner.

If the property as a whole is not being sold, a valuer or a professional estate agent will have to be brought in to estimate its value at the time the share is being sold. The partners now taking over that share will be responsible for paying the transfer duty on it as well as any outstanding rates and taxes accrued by the property.

“For example, if a share in a property worth R1.8 million with three partners is sold right now, the transfer duty would be R61 000. A third of this is R20 333. The remaining shareholders would have to pay this to legalise their taking over of the sold share.”

He says many joint buying agreements of this kind, are now operating in the buy-to-let market and have played a significant role in bringing more properties onto the market for renting purposes.

Taken from Nedbank letter.

6 tips to ensure that your new home is safe

Just moved into a new house? Then I’m sure that one of your first concerns will be protecting it.

But what do you need to do to keep burglars and other unwanted visitors away?

Lock up

Once you’ve moved in, assess all entry points to ensure that they have adequate protection. If one door or window could easily be broken into, then it will be broken into.

You should also ensure that every time you leave the house that everything is locked.

Neglecting your homes security is asking for trouble.

Don’t make it easy

Some of you out there might think it’s a good idea to leave a spare key hidden under a plant pot or beneath a mat for emergencies. But a burglar will check for that key first.  

If you’re going to leave a key to your house lying around, then you might as well not bother locking the front door at all.

The best option here is to give a spare key to a neighbour. This way, if you do need it in an emergency, you won’t have any trouble getting hold of it.

Leave them nowhere to hide

Trees and shrubs are the perfect hiding spots for criminals casing your house.

We’re not saying completely remove these things from your garden; just cut them back enough so that they don’t act as effective hidey holes for your unwanted visitors.

Get to know your neighbours

You aren’t going to be at home 24/7, but I’d bet that there’s always a neighbour around. And they’re going to be able to spot any suspicious activity.

Get to know everyone in your surrounding area. If they see someone around your property they can ring the authorities. 

Don’t advertise your belongings

It’s great that you have that huge flat screen TV and I understand that you want to show it off. But remember, if your neighbours can see it, so can a burglar.

Keep all valuable items out of site. You don’t want your house to become a shop window!

Remain vigilant

Lastly, make sure that you’re aware of what’s going on around you. If you notice suspicious behaviour in your neighbourhood don’t ignore it.

The more aware you are, the better protected your neighbourhood is. 

How to prepare your property for sale

4 ways to make your home more attractive to potential buyers

Selling a property is sometimes easy. You put it up on the market, let the offers roll in and then chose the best.

But other times, it can be hell. You put your property on the market and no one wants to come and view it. They just aren’t that interested.  

So what can you do to improve your chances?

We’ve put together a brief guide on how you can make your home more attractive to viewers and hopefully bring in those offers.

First impressions count

If the front of the house is unattractive, it’s going to be a battle to sell it.

Everyone and I mean everyone that visits the property is going to make a snap judgement as soon as they pull up outside so don’t sell yourself short!

You need to spend time sprucing up the exterior. Do the walls need a new lick of paint? Is the gate hanging off its hinges? Is the garden over grown?

Don’t just stand there, fix it up!

Neutralise

Whether you’ve lived in the house for 1 year or 20 years you’ve probably made it your own stamp on the property. And that’s great! But when you’re trying to sell it it’s going to make life harder.  

When people come to view your property they want to project their own personality onto it, they don’t want to see yours.

So strip out that contemporary wall art, and cover the room you painted pink in something a little more... middle-of-the-road.

Fix everything

Imagine that you’re accompanying someone round your property. They’ve shown a real interest and it looks like you might have a buyer on your hands.

And then they try the shower – it doesn’t work. And then a light – it doesn’t work. And then a tap – it doesn’t work.

They aren’t going to invest in a property that has more problems than positives.

So before put it on the market make sure that you fix everything. It’ll cost you but it’ll be worth it in the long run!

And if there’s something that you can’t fix, don’t ignore it. Hire a pro to come in and resolve it.

Show off its best bits

The best way to advertise your property is by placing an ad online. And to do this, you need to take some snap shots of your home.

You should always show off the houses best features.

Does it have a huge garden? Then take plenty of pictures of that! Is the garage a little too small to be functional? Then avoid taking snaps of that.

It sounds like such an obvious thing, but you’d be surprised at the amount of people who don’t bother showing the property off at its best!

ooba Reports Continued Property Price Growth and Record Approvals

ooba Reports Continued Property Price Growth and Record Approvals

The latest statistics from ooba, South Africa’s biggest bond originator, show that the property market has entered the fourth quarter of 2013 with positive growth and increasing lender confidence. At the same time, ooba has broken new records in approved home loans.

ooba’s Average Purchase price, at R935,252, has shown significant year-on-year price growth of 9.4% and month-on-month growth of 4.4%.

The First-time buyer’s Purchase Price has also shown a healthy year-on-year increase of 9.6% and a month-on-month increase of 5.5% to R711,691. Of ooba’s total intake of bond applications in October, 52.1% were from first-time buyers.

The value of home loans approved through ooba in October this year is 22% up on October 2012.

The Average Approved Bond size at R795,993 was up 7.8% year on year and 3.4% higher month on month. “October 2013’s average bond size is our highest average bond size on record,” says Rhys Dyer, CEO of ooba.

The Average Deposit recorded by ooba was higher both year-on-year and month-on-month by 9.6% and 5.7% respectively, at 14.9% of the purchase price.  This is indicative of the ongoing drive by banks to encourage homebuyers to put down a deposit on their properties..

The Initial Bank Decline ratio is down year on year by 1.6% and is unchanged month on month at 47.2%, while the Ratio of Applications Declined by One Lender, Granted by Another has increased year on year by 1.8% but decreased month on month by 2.2% to 26.7%.

In October, ooba’s Effective Approval Rate, which is the overall percentage of loans approved once ooba has shopped the loan to multiple banks, at 65.4%, has shown a year-on-year increase of 2.0%.

ooba’s trailing approval rate, which takes into account loans approved after month-end, is currently 72.2%, showing that ooba is obtaining approval for more than seven out of every 10 home loan applications it receives.

“Taken together,  ooba’s October statistics are indicative of a stable and  balanced property market that is supported by  improved  lender confidence”  says Dyer.

Full oobarometer analysis

Indicator	Oct 2013	Oct 2012	Change yr on yr (Oct 13 vs Oct 12)	Sep 2013	Change month on month (Oct 13 to Sep 13)
Avg purchase price	935,252	854,740	9.4%	896,258	4.4%
Avg purchase price of  first time buyer	711,691	649,424	9.6%	674,590	5.5%
Avg approved bond size	795,993	738,213	7.8%	769,628	3.4%
Avg deposit (as % of purchase price)	14.9% (R139,259)	13.6% (R116,527)	9.6%	14.1% (R126,630)	5.7%
Avg age of applicant	37	36	1 Year Older	37	No Change
Avg initial decline ratio (first bank decline)	47.2%	48.8%	-1.6%	47.2%	0.0%
Ratio of applications declined by one lender but approved by another	26.7%	24.9%	1.8%	28.9%	-2.2%
Effective approval ratio	65.4%	63.4%	2.0%	66.4%	-1.0%

Prepare for All the Costs of Buying a Home

Wouldn’t it be lovely if the price tag on your new home was all you had to pay? In reality, there are several hidden and not-so-hidden costs associated with buying property. Here are some of the major expenses, to help you prepare.

“Buying a home is the biggest financial commitment that most people will make in their lifetime,” says Linda Rall, provincial sales manager in KwaZulu-Natal at ooba, South Africa’s biggest bond originator. “But there are a lot of other expenses to factor in, and it’s worth planning for these in advance of transfer so that you can be sure you have the money available when you move in.”

She says that the following expenses should be planned for:

Bond registration and transfer costs

These are probably the biggest cost associated with buying a property. They are also unavoidable. You can work out the fees on properties that you are considering by using the calculators at www.ooba.co.za/calculators/bond-and-transfer-costs-calculator. But to give you an idea, on a R1 million bond, the bond registration cost estimate would be R19,759 and the transfer cost estimate would be R28,875.

“These days, banks are less likely to grant 100% bonds, and they are unlikely to incorporate the costs of transfer, so make sure that you have the funds available for this vital part of the homebuying process,” says Rall.

Moving costs

You’ve bought the place; now you’re going to have to move in. Depending on where you’ve been living, and how much furniture you already own, you might have to hire a moving company to get you into your new home.

This costs anywhere between R5,000 and R15,000 in the same city, but most companies offer a discount if you move in the week and in the middle of the month, when demand is lower. You can also investigate mini move or bakkie-for-hire options, which would be cheaper, but perhaps a bit more work for you.

General repairs and maintenance

While some homes are in perfect condition on the day of transfer, chances are you’ll have to do some cleaning, repainting and general repairs to make yours feel more like home. Some of these will be essential, others will relate to your own personal taste or budget.

“You should definitely set aside some cash for these unforeseen expenses,” says Rall. “Try to gain access to the property ahead of moving in, so that you can write up a realistic budget for what you will need to spend.”

You should also set aside a few hundred rand for all the basic household maintenance items you will need, like detergents, brooms, cloths and polish. And remember that houses need ongoing maintenance, so always keep some cash ready for unexpected expenses.

Getting the utilities in

If you are buying a freehold property (not a sectional title), you will need to register for your water and electricity connection, and your telephone and internet lines if you need those. These costs vary from area to area, and the internet fee will depend on the type of connection that you want, and whether the relevant lines are already installed.

In general, put aside around R1,000 to R3,000 for connecting the electricity, water and telephone– but you may be required to put down a deposit with the telephone company as well, depending on your credit profile. Investigate the different internet connection costs with your service provider.

And obviously, once those services are connected, you will have to pay for them every month.

Prepare for rates and levies

If you have purchased a freehold property, you will have to pay rates and taxes, which can be anywhere from a couple of hundred to a few thousand rand, depending on the value of your property. Rates cover sewer usage and garbage removal, while your taxes are calculated against the value of your property. The estate agent should have included these rates in the information about the property when you were househunting, but if you need to find out, you can ask the municipality representative when you register for water and electricity. These rates will stay the same every month.

If you have bought into a sectional title, the apartment block’s body corporate will have set a levy to pay every month for the general upkeep of the buildings.

Some suburbs have additional levies that are charged for a street security guard or boom operator. While these are most often voluntary, if you benefit from the arrangement, it’s good to contribute.

Security

When buying a new home, it’s a good idea to assess the security of the other houses in the area, and find out about the crime rates from the local police station, and then update your own security accordingly. And you’ll have to budget for a monthly armed response fee as well.

“Many security companies offer a package deal on installation with a contract for a certain term,” says Rall. “Be sure that you’re happy with the length of the commitment before signing a deal like this, but it can be a very cost effective way to get a good security system in place.”

Insurance

Your bank will insist that you have homeowners insurance in place to cover any structural damage to the property. This is generally affordable with competitive options available to you and can be included in your monthly bond repayments. However, your possessions are not covered by this insurance, so it’s a good idea to explore the costs of an additional policy to cover you for theft.

Rall also cautions that if you have existing insurance cover, you must inform your broker of your new address as this can change the risk factors in your policy and alter your premiums.

Furniture and electronics

Once you have a home, you will want to fill it with beautiful things. Of course, this kind of refurbishment is a luxury, and one that can be put off until you have settled in. However, if there are any items that are vital to making your life in your new home comfortable, then get a costing on these and factor them into your budget.

“Owning a new home is liberating, but the financial commitment can feel like a burden,” says Rall. “With forethought and planning, you can budget for the major expenses that are likely to come your way, which will give you a bit of control and confidence as you settle in to your new home.”

Taken from ooba news dd 11/11/13 

Warning against high rental increases

In the current property market, landlords who continue to think that they can raise residential rentals annually by 10 percent (or even more) are creating a situation in which they are likely to lose tenants, and such lost tenants will be difficult to replace.

Good tenants, those who pay on time and care for the property, are not easily found and in the current market should be cherished and held onto.

This was one of the more important messages delivered recently by Tony Clarke, Managing Director of the Rawson Property Group, to Rawson Rentals franchisees. “You have to realise and accept that there will almost always be some other landlord, probably advised by a sensible agent, who will be offering a more favourable, more equitable deal,"

He warns that if a landlord insists on being greedy, they will find that they will lose out.

Clarke says good tenants, those who pay on time and care for the property, are not easily found and in the current market should be cherished and held onto.

If this means settling for only 5 to 7 percent increases annually, so be it, he says. “The difference between a 10 percent and a 7 percent rental increase can be as small as R150, the equivalent of a takeaway pizza and soft drink today. Is it really worth losing a reliable tenant for an almost insignificant amount?”

He says although there is in some areas a shortage of rental stock, it has also to be appreciated, that a new inflow of stock has come about as a result of struggling bond holders putting their homes up for rental, so as to give themselves a breathing space.

“Those landlords who complacently believe that what they are offering is so good that they can raise rentals indiscriminately will be disappointed and rental agents have a duty to guide landlords into the correct thinking on these matters,” says Clarke.

Taken from Property 24