Banks prefer to bond wealthy properties
The proportion of bonded property showed an increase within the wealthy and affordable price segments from 2006 to 2010.
A recent study conducted by property analysts Lightstone indicates that South African banks prefer to bond high-priced property worth R1.5m or more, as buyers of these properties are considered less risky and more -likely to pay their bond repayments.
The proportion of bonded property showed a general increase within the wealthy and affordable price segments from 2006 to 2010, and this decreased proportionally for the comfortable price segment - even though the majority of properties sold in South Africa fall within this bracket.
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About Me
- 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 gareth@propertylaw.onmicrosoft.com (The information contained in this Blog does NOT constitute legal advice. If you require legal advice, you are very welcome to contact me.)
02 September 2011
Property market needs stimulation
Property experts reckon a cut in the interest rate by the Reserve Bank would be a positive move for the South African property market.
However, it is unlikely to change the pedestrian rate at which property prices are increasing, says Herschel Jawitz, chief executive officer of Jawitz Properties.
“It will certainly give consumers more confidence in the economy and ease their financial situations. “There is no doubt that there is a strong relationship between consumer confidence and the demand for property,” says Jawitz.
He says at the moment, buyers are under pressure and are cautious about putting pen to paper when it comes to making offers. As a result, he feels an interest rate cut would add some impetus to the market and at least hold property prices in positive nominal gain territory.
Homeowners still under pressure to keep their homes would welcome a cut in rates and give them a chance to catch up or remain current on their repayments.
The fewer distressed sellers and repossessed homes on the market, the better for property prices, buyers, sellers, estate agents and the banks. Should rates remain the same, the residential market will continue to recover slowly, he says.
“Real price gains are still some way away but prices are increasing and the market is currently offering good value at historically low rates,” says Jawitz.
Meanwhile, Pam Golding Properties (PGP) believes that although the activity levels have increased since the beginning of 2011, the residential property market is still currently experiencing considerable pent-up demand from home buyers.
This, reckons PGP, is largely due to the fact that the ability of buyers to purchase either for cash or with a low deposit is limited.
Dr Andrew Golding, chief executive officer of PGP says there is significant number of would-be buyers who cannot access finance.
“Although interest rates are low currently, the reality is that the market has flattened again and in order to stimulate greater impetus in the primary housing market, a relaxation of the stringent bank lending criteria would be welcome,” says Golding.
He explains that the desire or demand to buy is there, whether it is for the first-time, upgrade, downsize or simply relocate. In the leisure or second home market, there are price reductions and opportunities for buyers taking a longer term view of the market and their investment.
In some instances, he says, sales are being concluded to buyers seeking leisure property and have means to acquire prime coastal investment properties at premium prices without pressure to source rental income from the property when not utilised.
“Despite the fact that the South African housing market remains muted, it continues to demonstrate resilience in the face of global economic concerns,” adds Golding.
However, it is unlikely to change the pedestrian rate at which property prices are increasing, says Herschel Jawitz, chief executive officer of Jawitz Properties.
“It will certainly give consumers more confidence in the economy and ease their financial situations. “There is no doubt that there is a strong relationship between consumer confidence and the demand for property,” says Jawitz.
He says at the moment, buyers are under pressure and are cautious about putting pen to paper when it comes to making offers. As a result, he feels an interest rate cut would add some impetus to the market and at least hold property prices in positive nominal gain territory.
Homeowners still under pressure to keep their homes would welcome a cut in rates and give them a chance to catch up or remain current on their repayments.
The fewer distressed sellers and repossessed homes on the market, the better for property prices, buyers, sellers, estate agents and the banks. Should rates remain the same, the residential market will continue to recover slowly, he says.
“Real price gains are still some way away but prices are increasing and the market is currently offering good value at historically low rates,” says Jawitz.
Meanwhile, Pam Golding Properties (PGP) believes that although the activity levels have increased since the beginning of 2011, the residential property market is still currently experiencing considerable pent-up demand from home buyers.
This, reckons PGP, is largely due to the fact that the ability of buyers to purchase either for cash or with a low deposit is limited.
Dr Andrew Golding, chief executive officer of PGP says there is significant number of would-be buyers who cannot access finance.
“Although interest rates are low currently, the reality is that the market has flattened again and in order to stimulate greater impetus in the primary housing market, a relaxation of the stringent bank lending criteria would be welcome,” says Golding.
He explains that the desire or demand to buy is there, whether it is for the first-time, upgrade, downsize or simply relocate. In the leisure or second home market, there are price reductions and opportunities for buyers taking a longer term view of the market and their investment.
In some instances, he says, sales are being concluded to buyers seeking leisure property and have means to acquire prime coastal investment properties at premium prices without pressure to source rental income from the property when not utilised.
“Despite the fact that the South African housing market remains muted, it continues to demonstrate resilience in the face of global economic concerns,” adds Golding.
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Absa lends up to 100 percent home loan
Absa says it is still giving 100 percent loan-to-value to would-be home buyers even in this market but only if they qualify.
According to Sifiso Shongwe, managing executive of Absa Home Loans, loans are being granted across the board to applicants who qualify - meaning they have a good credit rating.
“Since the National Credit Act came into effect, the dynamics have changed and as banks, we have to exercise responsible lending,” says Shongwe.
He says as a bank, they have a target they would like to reach in terms of ensuring South Africans access finance to buy homes. Without giving any figures, he says they have not surpassed that target as yet.
“The focus of demand for and supply of housing is set to be on smaller-sized and higher-density housing because affordability is set to remain a key factor into the future,” he says.
Shongwe says in the current economy, owning a house has become beyond the reach of many South Africans and innovative products both in physical housing and in financing are required to reduce the housing backlog.
He explains that they are seeing growth in the affordable market where people are buying much smaller houses. Banks, he says, are still in the business of lending and are still lending up to 100 percent loans to property buyers if they meet the required criteria.
Young Carr, chief executive officer of the Aida Property Group, says the first thing banks will do on receiving a home loan application is to check the borrower’s credit history.
Good management of monthly bills, including any clothing or furniture accounts and credit card payments is critical even for young people who have no immediate plans to buy a home, says Carr.
“Getting an early start on building a good credit record in this way also means that if there are any minor misjudgments early in a working career, they will most probably be outweighed by a longer period of good credit management when the time does come to buy a home.”
Carr says potential borrowers need to pay attention to the implications of the National Credit Act, which provides that lenders must ensure, before they grant any new credit, that borrowers will not be committing too much of their income to debt repayment.
They do this by compiling a complete debt profile including all other repayments the consumer has to make as well as regular monthly expenditure on items such as transport, food and school fees before they can approve a home loan, he says.
According to Sifiso Shongwe, managing executive of Absa Home Loans, loans are being granted across the board to applicants who qualify - meaning they have a good credit rating.
“Since the National Credit Act came into effect, the dynamics have changed and as banks, we have to exercise responsible lending,” says Shongwe.
He says as a bank, they have a target they would like to reach in terms of ensuring South Africans access finance to buy homes. Without giving any figures, he says they have not surpassed that target as yet.
“The focus of demand for and supply of housing is set to be on smaller-sized and higher-density housing because affordability is set to remain a key factor into the future,” he says.
Shongwe says in the current economy, owning a house has become beyond the reach of many South Africans and innovative products both in physical housing and in financing are required to reduce the housing backlog.
He explains that they are seeing growth in the affordable market where people are buying much smaller houses. Banks, he says, are still in the business of lending and are still lending up to 100 percent loans to property buyers if they meet the required criteria.
Young Carr, chief executive officer of the Aida Property Group, says the first thing banks will do on receiving a home loan application is to check the borrower’s credit history.
Good management of monthly bills, including any clothing or furniture accounts and credit card payments is critical even for young people who have no immediate plans to buy a home, says Carr.
“Getting an early start on building a good credit record in this way also means that if there are any minor misjudgments early in a working career, they will most probably be outweighed by a longer period of good credit management when the time does come to buy a home.”
Carr says potential borrowers need to pay attention to the implications of the National Credit Act, which provides that lenders must ensure, before they grant any new credit, that borrowers will not be committing too much of their income to debt repayment.
They do this by compiling a complete debt profile including all other repayments the consumer has to make as well as regular monthly expenditure on items such as transport, food and school fees before they can approve a home loan, he says.
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01 September 2011
Estate agents' board readies to go belly up : Property News from IOLProperty
Estate agents' board readies to go belly up : Property News from IOLProperty
The Estate Agency Affairs Board appears to be imploding, with two senior members suspended, nasty, mass e-mails being sent and accusations of fraud and corruption flying around.
The Estate Agency Affairs Board appears to be imploding, with two senior members suspended, nasty, mass e-mails being sent and accusations of fraud and corruption flying around.
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Liberty plans 60 floor Sandton office tower
Liberty plans 60 floor Sandton office tower
Liberty Properties, owned by insurer Liberty Group, is planning a 60-storey plus office Tower in Sandton City following its over a billion rand upgrade of the precinct, but says it does not expect work to start before 2013 as tenants need to get a breather from construction.
Sandton City generates income of R600m on an annual basis from the complex and office space. Liberty Properties owns 75% of Sandton City and is the largest single asset within the property portfolio, which consists of 33 properties
“What we are doing at the moment is phase one. What we will probably have is a three phase master plan. There are plans which have to be approved by the board ... The plan is to do another phase which will include office space. The real work I would not see it starting before 2013. We need to give the centre some time to breathe,” Ogbu said.
Currently Sandton City is undergoing a facelift, scheduled to be ready by November 10 this year. With the new extension, the over three decades old Sandton City will add just over 30 000 square meters with new space for 72 tenants. The mall is expected to boast two new restaurants that will give patrons a close view of the traffic flowing on Rivonia Road.
The new space is also expected to host Spanish fashion retailer Zara and among other a big flagship store of @Home. Woolworths will also have a separate store for its Trenery and Country Road brands. Sandton City centre manager Sharon Swain said there is going to be a bit of a shift in tenancy and the plan is to host high end stores in one area.
Over the last three years Liberty Properties’ spent over R3bn upgrading Sandton City, Eastgate Mall and Mitchell Plain. Ogbu says despite the extensions the company still has a lot of demand that it can’t meet. Its vacancies across the portfolio are around 5%.Ogbu says the unit has been doing well delivering inflation beating returns.
Asked about risk of over investing Ogbu said its properties were managed conservatively and construction happened only when there was a certain level of pre-letting. Liberty Properties is also working on a $165m development in Lusaka and R300m office facility in Swaziland. It also has projects in the pipeline in Nigeria.
“We have built a strong portfolio and we have very good assets . We can look forward to solid growth going forward ... The intention is not just to grow assets but to build a strong stable business,” Ogbu added.
He said there was no appetite to list its property portfolio at the moment.
Liberty Properties, owned by insurer Liberty Group, is planning a 60-storey plus office Tower in Sandton City following its over a billion rand upgrade of the precinct, but says it does not expect work to start before 2013 as tenants need to get a breather from construction.
Sandton City generates income of R600m on an annual basis from the complex and office space. Liberty Properties owns 75% of Sandton City and is the largest single asset within the property portfolio, which consists of 33 properties
“What we are doing at the moment is phase one. What we will probably have is a three phase master plan. There are plans which have to be approved by the board ... The plan is to do another phase which will include office space. The real work I would not see it starting before 2013. We need to give the centre some time to breathe,” Ogbu said.
Currently Sandton City is undergoing a facelift, scheduled to be ready by November 10 this year. With the new extension, the over three decades old Sandton City will add just over 30 000 square meters with new space for 72 tenants. The mall is expected to boast two new restaurants that will give patrons a close view of the traffic flowing on Rivonia Road.
The new space is also expected to host Spanish fashion retailer Zara and among other a big flagship store of @Home. Woolworths will also have a separate store for its Trenery and Country Road brands. Sandton City centre manager Sharon Swain said there is going to be a bit of a shift in tenancy and the plan is to host high end stores in one area.
Over the last three years Liberty Properties’ spent over R3bn upgrading Sandton City, Eastgate Mall and Mitchell Plain. Ogbu says despite the extensions the company still has a lot of demand that it can’t meet. Its vacancies across the portfolio are around 5%.Ogbu says the unit has been doing well delivering inflation beating returns.
Asked about risk of over investing Ogbu said its properties were managed conservatively and construction happened only when there was a certain level of pre-letting. Liberty Properties is also working on a $165m development in Lusaka and R300m office facility in Swaziland. It also has projects in the pipeline in Nigeria.
“We have built a strong portfolio and we have very good assets . We can look forward to solid growth going forward ... The intention is not just to grow assets but to build a strong stable business,” Ogbu added.
He said there was no appetite to list its property portfolio at the moment.
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31 August 2011
Offices stand empty
Offices stand empty
In my previous posting, I highlighted Liberty's new Sandton property. If you go back through my postings you will see news about several of South Africa's biggest companies (e.g. Old Mutual, Standard Bank and others) building massive new office blocks in Sandton.
This is in addition to the major corporations that have already moved there, including the Johannesburg Stock Exchange.
This report deals with vacancies in the Johannesburg CBD. The trend is clear but is it reversable?
Gareth Shepperson
In my previous posting, I highlighted Liberty's new Sandton property. If you go back through my postings you will see news about several of South Africa's biggest companies (e.g. Old Mutual, Standard Bank and others) building massive new office blocks in Sandton.
This is in addition to the major corporations that have already moved there, including the Johannesburg Stock Exchange.
This report deals with vacancies in the Johannesburg CBD. The trend is clear but is it reversable?
Gareth Shepperson
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Special Report Podcast: Mel Urdang - director: retail, Liberty Properties - Boardroom Talk with Alec Hogg | Moneyweb
Special Report Podcast: Mel Urdang - director: retail, Liberty Properties - Boardroom Talk with Alec Hogg Moneyweb
Liberty’s R1.7bn Sandton City investment and property shares to invest in.
Liberty’s R1.7bn Sandton City investment and property shares to invest in.
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29 August 2011
ConCourt dismisses bid on compensation
ConCourt dismisses bid on compensation
The Constitutional Court did not agree with a KwaZulu-Natal family trust that the amount and time of compensation must be settled before their land was expropriated, in a judgment handed down in Johannesburg on Thursday.
The matter related to properties along the Umgeni River which flows through parts of Durban.
When notice of expropriation in order to canalise the river was received in 2004, Mohammed Yusuf Haffajee and others did not formally object.
They were willing to vacate the property but wanted to enter into a private treaty.
The expropriation date was set by the municipality for July 31 2005 without an agreement on compensation having been reached.
The eThekwini municipality had tendered a compensation amount but it was rejected.
The city believed that compensation and expropriation were separate, and that a disagreement on compensation did not invalidate expropriation.
The applicants insisted that expropriation could not take place until the amount of compensation had been determined.
An eviction order against them was granted by the High Court in Durban and the land owners appealed this on the grounds that expropriation before settling the compensation issue was unconstitutional.
They believed that under the property clause in Section 25 of the Constitution, determining the amount and time of the compensation was a prerequisite.
Leave to appeal was refused in the High Court and the Supreme Court of Appeal.
They then applied for leave to appeal at the Constitutional Court, but the court found that although there would be times where it would be unjust to evict people before determining compensation, like cases where people could lose their livelihood or homes, there were also cases where this would not be possible.
Urgent evacuation ahead of natural disasters would be an example.
An inflexible requirement for compensation before expropriation would therefore be against Section 25(3) of the Constitution that the amount and time of compensation must be a balance between the public interest and the interests of those affected by expropriation.
Therefore, Section 25(2) of the Constitution did not require that the amount and time of compensation and payment must always be determined before expropriation.
The court said this determination would generally be just and equitable, but where it had to be done after expropriation, it should be done as soon as was reasonably possible.
Eviction following expropriation cannot take place without agreement between the parties, the judges continued, and if there is no agreement, then this must be done under court supervision.
In disputed cases of eviction, the courts must ensure a just and equitable outcome in line with Section 26, which protects the right of access to housing.
The court allowed the application for leave to appeal, but the appeal itself was dismissed with each party ordered to pay their own costs.
The Constitutional Court did not agree with a KwaZulu-Natal family trust that the amount and time of compensation must be settled before their land was expropriated, in a judgment handed down in Johannesburg on Thursday.
The matter related to properties along the Umgeni River which flows through parts of Durban.
When notice of expropriation in order to canalise the river was received in 2004, Mohammed Yusuf Haffajee and others did not formally object.
They were willing to vacate the property but wanted to enter into a private treaty.
The expropriation date was set by the municipality for July 31 2005 without an agreement on compensation having been reached.
The eThekwini municipality had tendered a compensation amount but it was rejected.
The city believed that compensation and expropriation were separate, and that a disagreement on compensation did not invalidate expropriation.
The applicants insisted that expropriation could not take place until the amount of compensation had been determined.
An eviction order against them was granted by the High Court in Durban and the land owners appealed this on the grounds that expropriation before settling the compensation issue was unconstitutional.
They believed that under the property clause in Section 25 of the Constitution, determining the amount and time of the compensation was a prerequisite.
Leave to appeal was refused in the High Court and the Supreme Court of Appeal.
They then applied for leave to appeal at the Constitutional Court, but the court found that although there would be times where it would be unjust to evict people before determining compensation, like cases where people could lose their livelihood or homes, there were also cases where this would not be possible.
Urgent evacuation ahead of natural disasters would be an example.
An inflexible requirement for compensation before expropriation would therefore be against Section 25(3) of the Constitution that the amount and time of compensation must be a balance between the public interest and the interests of those affected by expropriation.
Therefore, Section 25(2) of the Constitution did not require that the amount and time of compensation and payment must always be determined before expropriation.
The court said this determination would generally be just and equitable, but where it had to be done after expropriation, it should be done as soon as was reasonably possible.
Eviction following expropriation cannot take place without agreement between the parties, the judges continued, and if there is no agreement, then this must be done under court supervision.
In disputed cases of eviction, the courts must ensure a just and equitable outcome in line with Section 26, which protects the right of access to housing.
The court allowed the application for leave to appeal, but the appeal itself was dismissed with each party ordered to pay their own costs.
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