- Gareth Shepperson
- Pretoria, Gauteng Province, South Africa
- Property Lawyer & Conveyancer ... Lover of Life in general!! www.prop-law.co.za In this Blog we have always brought you the latest PROPERTY NEWS but now we will also bring you a Q & A SECTION, where we answer readers questions. Please e-mail your questions to email@example.com (The information contained in this Blog does NOT constitute legal advice. If you require legal advice, you are very welcome to contact me.)
27 May 2011
Realestateweb - SA RMBS performance remains stable In March 2011 - Moody`s - Investment insights - South Africa's fastest-growing property website
London, 24 May 2011 -- The performance of the South African residential mortgage-backed securities (RMBS) market remained stable during the six-month period leading to March 2011, according to the latest indices published by Moody's Investors Service.
25 May 2011
The first quarter of 2011 saw a 25% increase in volume of transactions concluded for rentals in the Cape Town Metropolitan Area, with demand for lower-to-mid priced (R5,000 - R10,000) rentals outstripping supply.
Constantia Sectional Title Management (CSTM) is hours away from having its fidelity fund certificate (FFC) withdrawn by the Estate Agency Affairs Board (EAAB). On Tuesday the EAAB will in an urgent application to the South Gauteng High Court seek to withdraw CSTM’s FFC and have a curator officially appointed to administer its trust account.
By 2025, the dollar will no longer be the world's dominant reserve currency; instead, global finance will be based on a multipolar system in which the dollar shares the role of top currency dog with the euro and the renminbi.
This is one of the predictions of the World Bank's latest report, Global Development Horizons 2011-Multipolarity: The New Global Economy, which argues that the growing economic importance of emerging markets is reshaping the global system in fundamental and important ways.
24 May 2011
Banks declined fewer home loans in April 2011 compared to the same month in 2010, a bond originator said on Monday.
"The ability to obtain financing is one of the biggest drivers in the property market, so the consistent improvements are positive for the market," ooba CEO Saul Geffen said in a statement.
The bank initial decline ratio was 8.7 percent lower year-on-year, at 45.4 percent.
The bank effective approval ratio for home loans increased significantly from 57.3 percent in April last year to 64.4 percent, ooba found.
Geffen said the strong April approval rates followed record numbers in March, when the approval figure was the highest value of approved home loans since October 2008.
The average deposit size as a percentage of the purchase price decreased year-on-year by 39.6 percent to 13.1 percent, or R108,164.
At the same time, the average approved bond size increased by 3.7 percent to R715,319 in April 2011 from R689,742 in April 2010.
"The average deposit for April was only 13 percent of purchase price, which is significantly improved from the levels seen in 2009, and this opens up a considerably broader homebuyer base who can now afford the lower deposit requirements," said Geffen.
The oobarometer price index showed a year-on-year decline in the average purchase price of 6.5 percent to R823,483 in April 2011 from R881,044 a year earlier.
The average purchase price by a first time buyer fell by a more moderate 0.2 percent year-on-year to R625,252.
Geffen said the decline in house prices in April pointed to a further period of declining prices, after strong growth in the first half of 2010.
"We anticipate the negative growth trend will reverse shortly after mid-year and show moderate positive price growth for the second half of the year," he said. - Sapa
Sharemax investors are being offered the choice between receiving a monthly income for their investment in the company or being repaid part of the money that they have invested in a full and final settlement agreement.
About 40 000 investors have put more than R4,5-billion into the property syndication company. The Sharemax board has proposed that a scheme of arrangement and an offer of compromise is negotiated with investors.
In September last year Sharemax defaulted on monthly interest payment to investors and this led to the company being investigated and statutory managers being appointed to run the scheme which appeared to be operating in contravention of the Banks Act.
Spokesman for the company, Dawie Roodt confirmed that some of the companies in the Sharemax portfolio were "definitely bankrupt" and said that the amount owed to investors by some of the companies exceeded the value of assets owned by the company.
He did not say which of the companies was bankrupt.
He says that the R3,5-billion The Villa shopping centre, south east of Pretoria is one of the developments that is bankrupt and Roodt says that one of the advantages of liquidation of the bankrupt businesses is that certain investigations could be conducted and those at fault identified.
However, he adds that liquidation would not be in the interests of the investors.
He says the new board of Sharemax has been granted permission by the High Court to seek the approval of investors in Zambezi Retail Park and The Villa to outline details of an income plan scheme as part of a scheme of arrangement and offer of compromise. The dates for these meetings have not yet been finalised.
Roodt says that the reason for this is that the board is still considering alternatives that might provide a better solution for the investors but would not say what these alternatives are.
He says that the board wants to give existing investors the option of staying in the syndication and riding out the tough times or getting out of it now and "taking a haircut" – a reference to getting back less money than originally invested.
He says that investors in The Villa will not be repaid the full amount of their investment.
Has it ever struck you just how many people are property experts when you mention that you are thinking of buying or selling a property?
Paddy Hartdegen writes a regular column for Property24.com
These well-meaning advisers – with opinions that are certainly influenced more by hearsay than knowledge – will say that now is not the time to be involved in the property sector and, as a rule of thumb, they think they're right.
People with a little more knowledge, like estate agents, will say it's an excellent time to buy but, if you want to sell, make sure that you've priced your house correctly, particularly if it falls into the upper price brackets.
Do estate agents give you a true value? Never. They give you a 'gut-instinct' based value that is determined by what you want and what they think they can get. If the house is slow to move, then the price is too high. It's a pathetic basis for determining a true value.
Bankers (responsible for lending the money) often won't say a word – except among friends. And the sad fact of the matter is that bankers are the ones who dictate the state of the property market. If they lend money, sales boom. If they don't sales dwindle.
And that's where you'd be so wrong. Different banks have different criteria and they use different yardsticks to adjudicate value. Ask for a value from a banker and you'll get four very different ones.
This, naturally enough, makes it incredibly difficult for property owners and for estate agents who, for instance, put in an application for a bond (based on a fair purchase price) to all four of the banks and find that some banks come back and say there is "insufficient value" in the property to the grant the bond amount applied for.
The more expensive the home, the greater variation there is. And much of that valuation process appears to be purely subjective rather than scientific.
Question a bank about the details of why the value is so low and they will come up with all sorts of subjective reasons: "It's not the right property to be buying in this market" or "The property is over-priced for the area" or "The owners have over-capitalised and want too much money" or the "The asking price is simply too high for the home" or, mostly importantly "We won't grant a loan of that size against that property"..
Forget the fact that the buyer has a right to decide what amount he or she is prepared to pay for the property in question. Forget the fact that the bank won't pay a penny of the excessively exorbitant interest rates that are calculated over the next 20 or 25 years. That's the buyer's responsibility.
Just remember banks borrow money from the Reserve Bank at 5,5% and charge the money they've borrowed at prime of 9% so banks make 3,5% gratis before lending a bean. It's iniquitous.
If that's not bad enough then we have the other factor: banks can now stipulate what a house is worth by making a snap, subjective and often unfair value judgment.
I watched one of these valuers at work on the property that I currently rent. He had a measuring tape (on wheels to calculate the perimeter of the house) that he wheeled past the plants (not next to the house) to give him a rough idea of the outer boundary.
Then he walked through the house, taking no more than five minutes to survey the lot. Then he swaggered through to my office demanding that I drop what I'm doing and immediately let him out.
If he was here for five minutes then that was a lot.
I went outside with him and waited next to his run-down white jalopy while he searched for an address in a map book.
After I had spent more time looking at him than he had spent looking at my house, I tapped on his window and said, rather sharply, "Listen, bud, I'm busy so why don't you leave find directions somewhere else rather than just wasting my time."
He drove away mumbling – and I didn't give a fig.
His visit was typical of all those others I have experienced when valuators come to value a house. In the course of my lifetime I have bought and sold more than 20 properties and I have never had a different experience from a bank's valuation man.
So I was hardly surprised to read the comments from Ronald Ennik, an executive director of Leapfrog Property Group who says that banks are damaging the property market by continuing to value properties "too conservatively".
He's quite right. I would take it further than Ennik did: I would say that banks are killing the property market and they seem to be doing so with a smile on their corporate faces and it makes me sick.
Homebuyers' dreams are smashed by a cretin who spends less than ten minutes looking at a property. The same cretin who cannot even read directions in a map book.
And the bank he represents accepts his word as gospel – the final say on what a property is worth. It's bizarre.
Surely there must be a less subjective way of determining property values?
Professional land valuers (like my cousin) will tell you that there is a lot more that goes into compiling an accurate and realistic property value than just wandering around with a tape measure and a pair of reasonable eyes.
And it is these professionals that should be doing the valuations for banks and it is their figures that should be the basis for any bond regardless of which bank it is that's granting the money.
Property values must surely be based on measurable criteria and not on value judgments. Value judgments are not a valuation, they're a guess. And I wish that Standard, Absa, Nedbank and FNB would remember that.
And then stick to lending money based on the risk profile of the individual and not on whether they approve of the purchase he or she is making.
I also wish that Capitec and African Bank (and others) would step into the market and shake it up completely by adopting a more fair and reasonable approach.
Because as things go mortgage-lending banks are just a very motley bunch.
The demand for property in SA belies reports of a "soft" market from First National Bank (FNB) and Absa (ASA), according to Jawitz Properties.
Absa reported that house prices encountered relatively sharper declines on a year-on-year basis in April, while FNB said the April increase in house prices may not be sustainable in the short term.
Jawitz Properties CEO Herschel Jawitz said: "Demand is measured by show-day attendance, enquiries, buyer appointments and website activity, all of which are still showing better numbers than property price performance would suggest. It's not as if the phone is not ringing."
He added that the underlying activity in the market continued to be resilient, but converting this underlying activity and interest into offers and successful deals was the real challenge.
"When buyers do decide to put in offers, they usually reflect their perception of a buyer's market, and often much work still needs to be done to close the gap between buyer and seller," he said.
Jawitz listed bank lending as another challenge. Statistics such as debt-to-income ratios posed a problem in terms of the recovery of the market. The current measure was at 78%, down from about 84%, and economists were using this as a key measure for bank lending.
"Consumers are indebted, but with consumer spending in the doldrums and interest rates at historic lows, the likelihood of this measure coming down much further is slim."
He said it was likely that the debt-to-income ratio might rise when interest rates started to go up later this year, or in 2012. If banks tightened their lending further, a real recovery in property prices might occur only in 2013. - Moyagabo Maake, I-Net Bridge
23 May 2011
The offices of Constantia Sectional Title Management (CSTM) in Roodepoort, Johannesburg were again raided on Friday by the Estate Agency Affairs Board’s (EAAB) inspectors assisted by the police. Gareth Shepperson