Is it the right time to fix your home loan?
Here is what the big-four banks say.
The demand to fix interest rates on a home loan has been subdued according to the majority of the big-four banks, but Standard Bank says it has fixed over R1bn in loans in the past five months and believes it is a great idea to fix if a client wants to ride out volatility.
“We have obviously been doing a campaign where we have actually said to the people that interest rates are at the lowest level in 36 years. Yes there is a risk that interest rates will go down based on what is happening in the world economy, but there is also a risk that interest rates will go up,” Standard Bank’s director of home loans, Funeka Ntombela said.
“For the customers, to the extent that they want to protect themselves, we think that it’s a great idea ... Previously if you wanted to fix the rate it would be prime plus but now it is hovering around prime to fix for about two years. If you are a customer and you are already on prime or prime minus 50 basis points is not such a giant leap. You might just say I am going to give up this to get a 24 month protection.”
A Reuters poll posted last week showed analysts see the Reserve Bank leaving the repo rate unchanged at 5.5% on Thursday. Reuters said almost half of the 26 polled forecast rates to start rising in the second half of next year.
Ntombela said although Standard Bank had fixed loans over R1bn in the past five months, the take up rate for the customers phoned was not 100%. But there were clients who thought it was not as expensive to fix now. She said for those who had a rate of prime minus two in their rate it was difficult for them to give that away by fixing.
Earlier in the year Moneyweb reported that Standard Bank was the only big-four bank that was not fixing. But after the report the bank backtracked on its decision and started awarding its customers the opportunity to fix.
Absa, FNB and Nedbank said the demand to fix was currently subdued. managing executive for Absa home loans, Sifiso Shongwe said the total value of loans fixed since April was about R60m. He added the majority of fixed rates taken up over the last six months were for a period of 24 months and in the range of 9% to 12%.
“The decision to fix or not will be influenced by, the term available for fixing, the initial difference between the fixed and variable rates offered to the customer – and the immediate impact thereof on the free cash flow of the customer,” Shongwe said.
He added that the customers interest rate expectations over the term available for fixing were also a factor.
Head of product, marketing and pricing at First National Bank (FNB), Praven Subbramoney, also shared the view that if customers fixed they would benefit from maintaining certainty of cash flow.
Subbramoney said at FNB clients were mostly taking up the 36 and 60 month fixing options. On top of the current interest rate, Subbramoney added the average premium to fix at FNB was 0.15% for 12 and 18 months, 0.20% for 24 months, 0.25% for 36 months, 0.55% for 48 months and 0.85% for 60 months.
Nedbank’s general manager of sales and customer service, Pat Lamont said although fixed rates protected people from unexpected additional monthly expenses a potential customer needs to consult widely before fixing.
“Clients need to take cognisance of the fact that fixed rate contracts carry financial penalties should one opt to cancel the contract. Dependent on the term, and the value of the bond amount, this may constitute a substantial amount. Hence, we would suggest that clients consider their options carefully and consult widely prior to entering into long-term fixed rate contracts,” Lamont said.
At Nedbank people can fix from 12-60 months and on average clients have been fixing for a period of 12-36 months.
Property Law, Property Developments and related Real Estate thoughts. www.prop-law.co.za
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.)
10 November 2011
Sluggish economic fundamentals subdues housing market outlook
Sluggish economic fundamentals subdues housing market outlook
Samuel Seef remains upbeat, but cautions that recovery of the property market will take longer than anticipated.
I remain upbeat, but the recovery of the property market will take longer than anticipated given the sluggish underlying macro-economic fundamentals. Following the robust pre-2007 levels he says, there has been more than four years of slowed activity and market adjustment. As with all markets, real estate is cyclical and I believe that we are now near the bottom of the curve and that prices and sales volumes are likely to ebb along for at least the next eighteen months before any noteworthy uptick. This would however, need to be driven by an economic pick-up, underpinned by positive employment growth.
There has also been significantly low levels of new developments and new stock brought to the market. This is likely to lead to a stock shortage once the market turns.
The volume of distressed properties continues to weigh on the general performance of the market. Only once there is a significant clearance of these can we look to return to normal activity levels he says. On the upside, the Bank deposit requirements will serve to bring more stability to the market in the long term. When home owners have some of their own money invested in their homes, they would generally work harder to keep up their mortgage payments. This will enable owners to better withstand some of the up-down effects characterised during this down-swing and will result in fewer foreclosures. The exception, should be first time home buyers where I would encourage the introduction of a formalised policy that enables them to acquire hundred percent bonds to encourage home ownership.
I do not believe that consumers can look forward to any further interest rate reductions. The South African Reserve Bank has been conservative in their monetary policy and given the upward inflationary trend and continued fuel and utility cost hikes, this would send the wrong message to the market. While a rate cut will improve affordability and help reduce consumer debt levels, it is unlikely to stimulate any significant demand push. The historically low interest rate has done very little to encourage any significant participation in the market by investors and top end buyers this year.
That being said, it is business as usual and activity continues in the market. There are still and keen buyers out there, but sellers need to be mindful of what buyers are prepared to pay and price correctly if they hope to conclude a successful transaction. Buyers are negotiating strongly and on their terms. The upshot is that as a result of the slow turnover, there is real value to be gained at the top end of the market. Now is indeed a good time to buy, but buyers should be aware that these conditions are unlikely to continue indefinitely.
Samuel Seef remains upbeat, but cautions that recovery of the property market will take longer than anticipated.
I remain upbeat, but the recovery of the property market will take longer than anticipated given the sluggish underlying macro-economic fundamentals. Following the robust pre-2007 levels he says, there has been more than four years of slowed activity and market adjustment. As with all markets, real estate is cyclical and I believe that we are now near the bottom of the curve and that prices and sales volumes are likely to ebb along for at least the next eighteen months before any noteworthy uptick. This would however, need to be driven by an economic pick-up, underpinned by positive employment growth.
There has also been significantly low levels of new developments and new stock brought to the market. This is likely to lead to a stock shortage once the market turns.
The volume of distressed properties continues to weigh on the general performance of the market. Only once there is a significant clearance of these can we look to return to normal activity levels he says. On the upside, the Bank deposit requirements will serve to bring more stability to the market in the long term. When home owners have some of their own money invested in their homes, they would generally work harder to keep up their mortgage payments. This will enable owners to better withstand some of the up-down effects characterised during this down-swing and will result in fewer foreclosures. The exception, should be first time home buyers where I would encourage the introduction of a formalised policy that enables them to acquire hundred percent bonds to encourage home ownership.
I do not believe that consumers can look forward to any further interest rate reductions. The South African Reserve Bank has been conservative in their monetary policy and given the upward inflationary trend and continued fuel and utility cost hikes, this would send the wrong message to the market. While a rate cut will improve affordability and help reduce consumer debt levels, it is unlikely to stimulate any significant demand push. The historically low interest rate has done very little to encourage any significant participation in the market by investors and top end buyers this year.
That being said, it is business as usual and activity continues in the market. There are still and keen buyers out there, but sellers need to be mindful of what buyers are prepared to pay and price correctly if they hope to conclude a successful transaction. Buyers are negotiating strongly and on their terms. The upshot is that as a result of the slow turnover, there is real value to be gained at the top end of the market. Now is indeed a good time to buy, but buyers should be aware that these conditions are unlikely to continue indefinitely.
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09 November 2011
Unravelling China versus Europe - Myths and Misunderstandings
Unravelling China versus Europe - Myths and Misunderstandings
… provides parallel insights for SA.
Commentators – along with many investors - have taken to questioning the ability of democracies to compete with authoritarian China. The case gaining credence is that Europe’s leaders are innately incapable of taking sufficient action to remedy the deep flaws of the euro experiment. But even if most of Europe is destined for a generation of meagre growth, the core problems are not inherent to Western-styled democracy or capitalism. The core problem is that managing the intersection of democracy and capitalism requires transcending cultural differences.
The rapid changes and hyper competitiveness due to globalisation and advancing technologies raise the bar faster than poorly congealed multi-cultural societies such as the eurozone or SA can adjust.
In difficult times pain needs to be distributed by governments between various groups such as, workers and investors. Authoritarian regimes have an advantage when a tiny group of people behind closed doors can quickly decide. The Chinese approach also appeared advantageous earlier this year during Japan’s nuclear reactor melt down. Nuclear power became a radioactive discussion in democracies whereas China’s policymakers were much less overwhelmed.
Self interest is at the heart of both capitalism and democracy. But so is managing factional conflicts. China’s governing apparatus reeks of corruption but its overall track record of managing factional conflicts for the greater good has been exceptional for over 30 years. The legitimacy of the Chinese ruling elite however rests upon being able to maintain approximately 7% economic growth thus maintaining considerable employment momentum. A prolonged slowing of economic activity risks an Arab Spring with Chinese characters.
Moving beyond the typically wafer-thin analyses of brief TV commentaries, to right the European ship involves distributing pain. Lower benefits and pay must be distributed among various worker groups and voter factions while many investors must also be made to suffer. Haircuts on sovereign debts must be negotiated alongside recapitalising banks and concessions from unions and voters.
It is frequently pointed out that China foreign reserves and investments exceed $3trn. But for this reason and the fact that China cannot maintain 7% growth if its export markets are sliding into a deep recession, they have a deep vested interests in seeing the euro challenges being successfully resolved. As a substantial holder of euro denominated assets and a funder of the IMF, China is also directly at risk of having to share in the pain to be allocated.
The ideal scenario for China is that it gains political advantages while more aggressively weighting its European holdings at or near the bottom of asset prices. However, when seeking to manage holdings of distressed assets such greed-induced styles of thinking can be very dangerous. When commentators eye China’s cash hordes as a source of solutions they routinely overlook the generally bleak relationship between China’s overall balance sheet and its income statement.
China’s latest five year plan calls for shifting from extreme reliance on infrastructure investments and exports to a more normal economic mix with domestic consumption playing a rising role. There are reasons however that so many Chinese save so aggressively despite yields on many investments being less than inflation. Life expectancy in China has been expanding at a rapid clip while pension benefits remain scarce. As nearly 7% of the population starved to death half a century ago there are broad fears of old age misery. China’s long-term balance sheet is further diminished by the greatest demographic time bomb of all time brought on by its one child policy.
The income statement desired by China’s five year plan is threatened by Europe’s woes and its starvation-induced savings culture which can’t be overcome without huge pension fund investments. Three trillion dollars sounds like a lot but it works out to less than R20 000 per person.
Nor can China liquidate its accumulation of overseas investments without provoking currency appreciation and thus a contraction in its export income. European leaders would be able to negotiate aggressively with China and all their key investors if only they had a vision for a dynamic Europe.
In SA the key factional divides are among government, business and unions. Just as in Europe there is some alignment of interests and cooperation but not enough to be globally competitive. In Europe the core disconnects are among the higher savings countries in the North versus the deeply indebted nations on the periphery.
On the current path, countries that slip into Greece’s predicament will suffer for a very long time. Instead, four or five like-minded, higher savings countries should exit the Euro in favour of a new currency union supported by formidable fiscal unity. Of course this would be extremely difficult and expensive but it would lead to higher growth across the continent while providing an example for those countries which remain in the euro.
By comparison, SA’s challenges are much more manageable. Government should commit to becoming genuinely pro business. They will know they have become successful when SA becomes a popular destination for foreign direct investment including and beyond extractive industries.
*Shawn Hagedorn is an independent analyst
My thoughts echo the majority of what is stated here. In particular, I agree that SA will not be able to compete with China in any sector of the economy while the playing field remains uneven. The article points out that as an autocrisy (rather than a democracy), China is in a position to quickly implement decisions, especially when compared with Europe and SA. What the article does not point out clearly is that China can also quickly put down any hint of dissent and this puts them in a superior position vis-a-vis the trade unions and other civil society. There is no doubt that lower wages makes China more competative. From a purely economic point of view this puts China in a vastly superior position. The contrary is, however, also true from a humanitarian point of view. The question would therefore appear to me to be: "How much civil liberty are you prepared to sacrifice in exchange for economic superiority." I agree with the writer that ALL role players will need to take a "haircut" including government, shareholders, finacial institutions and workers in order to become more competative.
Gareth Shepperson
… provides parallel insights for SA.
Commentators – along with many investors - have taken to questioning the ability of democracies to compete with authoritarian China. The case gaining credence is that Europe’s leaders are innately incapable of taking sufficient action to remedy the deep flaws of the euro experiment. But even if most of Europe is destined for a generation of meagre growth, the core problems are not inherent to Western-styled democracy or capitalism. The core problem is that managing the intersection of democracy and capitalism requires transcending cultural differences.
The rapid changes and hyper competitiveness due to globalisation and advancing technologies raise the bar faster than poorly congealed multi-cultural societies such as the eurozone or SA can adjust.
In difficult times pain needs to be distributed by governments between various groups such as, workers and investors. Authoritarian regimes have an advantage when a tiny group of people behind closed doors can quickly decide. The Chinese approach also appeared advantageous earlier this year during Japan’s nuclear reactor melt down. Nuclear power became a radioactive discussion in democracies whereas China’s policymakers were much less overwhelmed.
Self interest is at the heart of both capitalism and democracy. But so is managing factional conflicts. China’s governing apparatus reeks of corruption but its overall track record of managing factional conflicts for the greater good has been exceptional for over 30 years. The legitimacy of the Chinese ruling elite however rests upon being able to maintain approximately 7% economic growth thus maintaining considerable employment momentum. A prolonged slowing of economic activity risks an Arab Spring with Chinese characters.
Moving beyond the typically wafer-thin analyses of brief TV commentaries, to right the European ship involves distributing pain. Lower benefits and pay must be distributed among various worker groups and voter factions while many investors must also be made to suffer. Haircuts on sovereign debts must be negotiated alongside recapitalising banks and concessions from unions and voters.
It is frequently pointed out that China foreign reserves and investments exceed $3trn. But for this reason and the fact that China cannot maintain 7% growth if its export markets are sliding into a deep recession, they have a deep vested interests in seeing the euro challenges being successfully resolved. As a substantial holder of euro denominated assets and a funder of the IMF, China is also directly at risk of having to share in the pain to be allocated.
The ideal scenario for China is that it gains political advantages while more aggressively weighting its European holdings at or near the bottom of asset prices. However, when seeking to manage holdings of distressed assets such greed-induced styles of thinking can be very dangerous. When commentators eye China’s cash hordes as a source of solutions they routinely overlook the generally bleak relationship between China’s overall balance sheet and its income statement.
China’s latest five year plan calls for shifting from extreme reliance on infrastructure investments and exports to a more normal economic mix with domestic consumption playing a rising role. There are reasons however that so many Chinese save so aggressively despite yields on many investments being less than inflation. Life expectancy in China has been expanding at a rapid clip while pension benefits remain scarce. As nearly 7% of the population starved to death half a century ago there are broad fears of old age misery. China’s long-term balance sheet is further diminished by the greatest demographic time bomb of all time brought on by its one child policy.
The income statement desired by China’s five year plan is threatened by Europe’s woes and its starvation-induced savings culture which can’t be overcome without huge pension fund investments. Three trillion dollars sounds like a lot but it works out to less than R20 000 per person.
Nor can China liquidate its accumulation of overseas investments without provoking currency appreciation and thus a contraction in its export income. European leaders would be able to negotiate aggressively with China and all their key investors if only they had a vision for a dynamic Europe.
In SA the key factional divides are among government, business and unions. Just as in Europe there is some alignment of interests and cooperation but not enough to be globally competitive. In Europe the core disconnects are among the higher savings countries in the North versus the deeply indebted nations on the periphery.
On the current path, countries that slip into Greece’s predicament will suffer for a very long time. Instead, four or five like-minded, higher savings countries should exit the Euro in favour of a new currency union supported by formidable fiscal unity. Of course this would be extremely difficult and expensive but it would lead to higher growth across the continent while providing an example for those countries which remain in the euro.
By comparison, SA’s challenges are much more manageable. Government should commit to becoming genuinely pro business. They will know they have become successful when SA becomes a popular destination for foreign direct investment including and beyond extractive industries.
*Shawn Hagedorn is an independent analyst
My thoughts echo the majority of what is stated here. In particular, I agree that SA will not be able to compete with China in any sector of the economy while the playing field remains uneven. The article points out that as an autocrisy (rather than a democracy), China is in a position to quickly implement decisions, especially when compared with Europe and SA. What the article does not point out clearly is that China can also quickly put down any hint of dissent and this puts them in a superior position vis-a-vis the trade unions and other civil society. There is no doubt that lower wages makes China more competative. From a purely economic point of view this puts China in a vastly superior position. The contrary is, however, also true from a humanitarian point of view. The question would therefore appear to me to be: "How much civil liberty are you prepared to sacrifice in exchange for economic superiority." I agree with the writer that ALL role players will need to take a "haircut" including government, shareholders, finacial institutions and workers in order to become more competative.
Gareth Shepperson
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08 November 2011
Nominal house prices edge higher: ABSA
Nominal house prices edge higher: Absa
While small houses continued its downwards trend.
(I-Net Bridge) - Nominal house prices continued to improve in two size categories (medium-sized and large) in October, while small houses continued its downwards trend according to Absa Home Loans.
According to Absa's calculations, the nominal value of homes in the medium-sized (building area of 141 square metres-200 square metres) increased to 404.1 index points from 386.7 a year before and large sized homes (building area of 221 square metres-400 square metres) improved to 405.2 index points from 397.3 for the comparative period a year ago.
Small houses (building area of 80 square metres-140 square metres) declined from 380.8 points for October last year to 368.9 points for October this year.
In real terms (after adjustment for the effect of inflation) annual price deflation continued across all three segments of housing up to September 2011, impacted by rising headline consumer price inflation, which reached a level of 5.7% year-on-year (y/y) in September.
The average real price (at constant 2008 prices) of houses in the middle-segment of the market was in September this year about 13% below its peak of mid-2007. This was the result of average nominal house price growth being below the average headline consumer price inflation rate during this period.
The average nominal house price was R734,800 for small homes, R1,009,500 for medium-sized homes, and R1,475,800 for large homes in October 2011.
While small houses continued its downwards trend.
(I-Net Bridge) - Nominal house prices continued to improve in two size categories (medium-sized and large) in October, while small houses continued its downwards trend according to Absa Home Loans.
According to Absa's calculations, the nominal value of homes in the medium-sized (building area of 141 square metres-200 square metres) increased to 404.1 index points from 386.7 a year before and large sized homes (building area of 221 square metres-400 square metres) improved to 405.2 index points from 397.3 for the comparative period a year ago.
Small houses (building area of 80 square metres-140 square metres) declined from 380.8 points for October last year to 368.9 points for October this year.
In real terms (after adjustment for the effect of inflation) annual price deflation continued across all three segments of housing up to September 2011, impacted by rising headline consumer price inflation, which reached a level of 5.7% year-on-year (y/y) in September.
The average real price (at constant 2008 prices) of houses in the middle-segment of the market was in September this year about 13% below its peak of mid-2007. This was the result of average nominal house price growth being below the average headline consumer price inflation rate during this period.
The average nominal house price was R734,800 for small homes, R1,009,500 for medium-sized homes, and R1,475,800 for large homes in October 2011.
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Pinnacle Point liquidated, to be probed
Pinnacle Point liquidated, to be probed
Section 417/418 inquiry to be initiated.
Ailing property firm Pinnacle Point, a company in which union workers invested over R200m, has been liquidated following an order granted in favour of one of its shareholders Cape Point Vineyard.
Sybrand van der Spuy, the owner of Cape Point Vineyard, told Moneyweb that Pinnacle Point had been liquidated late last week. He said the next step would be to initiate a section 417/418 inquiry, which would investigate how Pinnacle Point monies were expanded and how the company got to a financially appalling mode.
“Yes Pinnacle Point has been liquidated ... A liquidator has been appointed already. I am seeing the liquidators later this week. We will be asking for a section 417/418 inquiry,” Van Der Spuy said.
Van Der Spuy’s company Cape Point Vineyard owns 80m shares or just under 1% of the Pinnacle Point Group. Cape Point Vineyard won a business rescue in July, appointing Mike Lane as a practitioner. But because of issues and allegations of some who failed to support the business rescue, the circumstances pushed Cape Point Vineyard to convert its business rescue application into a final liquidation.
Initially Van Der Spuy felt there were prospects to rescue Pinnacle Point and potentially help recover millions of rands of workers money invested in the ailing company.
About R260m of Southern African Clothing and Textile Workers Union (SACTWU) monies were invested in Pinnacle Point Group (PPG). Referring to the liquidation Van Der Spuy told Moneyweb two months ago that:
“It’s not a disaster for myself I am losing a bit of money but if you look at the poor pensioner they are losing R260m and the chances of shareholders getting any money back I think it’s zero ... I have lost R5m. It’s one thing for me to lose R5m and other people to lose R260m.”
Another source confirmed the final liquidation was unopposed, but there were plans to push for a business rescue in spite of the final liquidation.
Pinnacle Point has been suspended from the JSE and could be delisted.
Section 417/418 inquiry to be initiated.
Ailing property firm Pinnacle Point, a company in which union workers invested over R200m, has been liquidated following an order granted in favour of one of its shareholders Cape Point Vineyard.
Sybrand van der Spuy, the owner of Cape Point Vineyard, told Moneyweb that Pinnacle Point had been liquidated late last week. He said the next step would be to initiate a section 417/418 inquiry, which would investigate how Pinnacle Point monies were expanded and how the company got to a financially appalling mode.
“Yes Pinnacle Point has been liquidated ... A liquidator has been appointed already. I am seeing the liquidators later this week. We will be asking for a section 417/418 inquiry,” Van Der Spuy said.
Van Der Spuy’s company Cape Point Vineyard owns 80m shares or just under 1% of the Pinnacle Point Group. Cape Point Vineyard won a business rescue in July, appointing Mike Lane as a practitioner. But because of issues and allegations of some who failed to support the business rescue, the circumstances pushed Cape Point Vineyard to convert its business rescue application into a final liquidation.
Initially Van Der Spuy felt there were prospects to rescue Pinnacle Point and potentially help recover millions of rands of workers money invested in the ailing company.
About R260m of Southern African Clothing and Textile Workers Union (SACTWU) monies were invested in Pinnacle Point Group (PPG). Referring to the liquidation Van Der Spuy told Moneyweb two months ago that:
“It’s not a disaster for myself I am losing a bit of money but if you look at the poor pensioner they are losing R260m and the chances of shareholders getting any money back I think it’s zero ... I have lost R5m. It’s one thing for me to lose R5m and other people to lose R260m.”
Another source confirmed the final liquidation was unopposed, but there were plans to push for a business rescue in spite of the final liquidation.
Pinnacle Point has been suspended from the JSE and could be delisted.
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07 November 2011
Concourt to rule when landlords may cancel leases
Concourt to rule when landlords may cancel leases
Concourt to rule when landlords may cancel leases
The Constitutional Court was due to hear argument today on whether a landlord may cancel leases and evict tenants to get higher rentals.
The matter will be brought by Ntombizodwa Yvonne Maphango and 14 others against Aengus Lifestyle Properties, with the Inner City Resource Centre as a friend of the court.
Aengus specialises in fashionable inner-city apartments and lofts developed in refurbished old Joburg buildings and office blocks. Its buildings include Tribeca Lofts and Fashion Lofts.
The company bought Lowliebenhof in Braamfontein and terminated existing residents' leases in order to put up rentals over amounts allowed by the escalation clauses.
Some of the residents objected to being evicted and took the matter to court.
The Johannesburg High Court and Supreme Court of Appeal held that the landlord was allowed to do this.
The 15 applicants will apply for leave to appeal to the Constitutional Court.
They argue they cannot be evicted, even if the leases were lawfully terminated.
Sapa
Concourt to rule when landlords may cancel leases
The Constitutional Court was due to hear argument today on whether a landlord may cancel leases and evict tenants to get higher rentals.
The matter will be brought by Ntombizodwa Yvonne Maphango and 14 others against Aengus Lifestyle Properties, with the Inner City Resource Centre as a friend of the court.
Aengus specialises in fashionable inner-city apartments and lofts developed in refurbished old Joburg buildings and office blocks. Its buildings include Tribeca Lofts and Fashion Lofts.
The company bought Lowliebenhof in Braamfontein and terminated existing residents' leases in order to put up rentals over amounts allowed by the escalation clauses.
Some of the residents objected to being evicted and took the matter to court.
The Johannesburg High Court and Supreme Court of Appeal held that the landlord was allowed to do this.
The 15 applicants will apply for leave to appeal to the Constitutional Court.
They argue they cannot be evicted, even if the leases were lawfully terminated.
Sapa
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Analysts challenge property pundit`s call not to buy
Analysts challenge property pundit`s call not to buy
Say it is a buyers’ market.
Interest rates are low, property is in abundance and distressed homes are going for a song, so if you are in the market, now is the time to buy. At least that is the view of realtor Engel & Völker and property specialists Lightstone.
In fact, CEO of Engel & Völker, Craig Hutchinson says with interest rates at the lowest it has been in years and with an abundance of property to choose from, now is the perfect time to buy. “It is very important to enter the property market as soon as possible as property should form part of any balanced financial plan and the sooner you own rather than rent, the sooner you start enjoying the capital appreciation which property gives,” Hutchinson said.
He maintains that property is the one asset that remains one of the best inflation beating vehicles over the long term.
In October 2011 the Rode Report for the third quarter advised first time entrants to rather rent for the next four to five years, rather than buy, adding not to expect any capital growth in the residential sector during this period.
Hutchinson says it is expected that there will be a month-to-month decline in the seasonally adjusted house price index in the near team which is good news for new entrants or those who are upgrading.
On first time buyers, the Rode Report said people buying now could expect a much higher instalment than if they were to rent. Erwin Rode maintains if you were to save the difference between what you would be paying if you rented as opposed to what you would be paying if you bought with four or five years in mind, you would actually be better off.
Engel & Völker hold a different view saying renting for less than you can buy and investing in something else only makes sense if you rent with the intention to buy. “Buying a property now would mean a buyer can negotiate a very good deal as this is very much a buyers’ market. At this stage there are also a lot of distressed properties available at below market value that means you will receive better value for your money.”
It says bond mortgages are 30% lower now than two years ago due to the current interest rates. “Even if you pay a premium for a fixed rate loan, it is highly unlikely that rates will be this low again. All these facts indicate that the time to buy is now.”
A Lightstone report has said house prices were particularly attractive in places like the KwaZulu-Natal south coast. Lightstone property analyst, Hailey Ivins, says: “If you look at annual inflation coast versus non coast, your coast is still going down, which means the value of property is going down – they are selling for values that are lower than what they were previously sold for, whereas your non-coastal is going up.
“That’s key to the economics and the pressure people are under… having to sell their holiday homes while still not getting what they want. Now is the time to buy because you’ll be getting property for really good value in terms of what you pay,” Ivins said.
Say it is a buyers’ market.
Interest rates are low, property is in abundance and distressed homes are going for a song, so if you are in the market, now is the time to buy. At least that is the view of realtor Engel & Völker and property specialists Lightstone.
In fact, CEO of Engel & Völker, Craig Hutchinson says with interest rates at the lowest it has been in years and with an abundance of property to choose from, now is the perfect time to buy. “It is very important to enter the property market as soon as possible as property should form part of any balanced financial plan and the sooner you own rather than rent, the sooner you start enjoying the capital appreciation which property gives,” Hutchinson said.
He maintains that property is the one asset that remains one of the best inflation beating vehicles over the long term.
In October 2011 the Rode Report for the third quarter advised first time entrants to rather rent for the next four to five years, rather than buy, adding not to expect any capital growth in the residential sector during this period.
Hutchinson says it is expected that there will be a month-to-month decline in the seasonally adjusted house price index in the near team which is good news for new entrants or those who are upgrading.
On first time buyers, the Rode Report said people buying now could expect a much higher instalment than if they were to rent. Erwin Rode maintains if you were to save the difference between what you would be paying if you rented as opposed to what you would be paying if you bought with four or five years in mind, you would actually be better off.
Engel & Völker hold a different view saying renting for less than you can buy and investing in something else only makes sense if you rent with the intention to buy. “Buying a property now would mean a buyer can negotiate a very good deal as this is very much a buyers’ market. At this stage there are also a lot of distressed properties available at below market value that means you will receive better value for your money.”
It says bond mortgages are 30% lower now than two years ago due to the current interest rates. “Even if you pay a premium for a fixed rate loan, it is highly unlikely that rates will be this low again. All these facts indicate that the time to buy is now.”
A Lightstone report has said house prices were particularly attractive in places like the KwaZulu-Natal south coast. Lightstone property analyst, Hailey Ivins, says: “If you look at annual inflation coast versus non coast, your coast is still going down, which means the value of property is going down – they are selling for values that are lower than what they were previously sold for, whereas your non-coastal is going up.
“That’s key to the economics and the pressure people are under… having to sell their holiday homes while still not getting what they want. Now is the time to buy because you’ll be getting property for really good value in terms of what you pay,” Ivins said.
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House prices will sink further: Absa Home Loans - Property | Moneyweb
House prices will sink further: Absa Home Loans - Property Moneyweb
On the back of rising headline consumer price inflation.
(I-Net Bridge) - House prices in real terms are expected to continue to decline for the rest of the year and in 2012 on the back of rising headline consumer price inflation, which is forecast to marginally breach the 6% level by the end of the year and for part of 2012 according to Jacques du Toit, property analyst at Absa Home Loans.
Du Toit said that based on house price trends up to the third quarter, and prospects for the economy and household finances, nominal price growth in the middle segment of the market was forecast to be well within single digits for the full year, projected at between 2% and 2.5%.
Absa Home Loans released their fourth quarter housing review report on Thursday, outlining trends in South African house prices and other property market related indicators up the third quarter of the year.
The report pointed out that SA's real economic growth came to a seasonally adjusted annualised rate of 1.3% in the second quarter of 2011, after rising by 4.5% in the first quarter.
Growth was influenced by global and domestic demand trends; the Japanese earthquake and tsunami, which negatively affected the local manufacturing sector as a result of supply shortages; and labour action in some sectors of the economy, which impacted production and service delivery. Real economic growth of 3.1% is projected for 2011, marginally higher than growth of 2.8% achieved in 2010.
Household income and consumption expenditure continued to grow in real terms in the second quarter, although at a slower pace as a result of rising inflation, which impacts consumers' spending power. The ratio of household debt to disposable income was somewhat lower at around 76% in the second quarter, which contributed to contain the cost of servicing debt against the background of low interest rates.
Du Toit said that many consumers were still battling with impaired credit records, negatively affecting their ability to take up credit, with this situation being reflected in continued low growth in household credit extension.
Trends in nominal house prices varied on an annual as well as a quarterly basis in the different segments of the market and geographical areas in the third quarter. In real terms, i.e. after adjustment for the effect of consumer price inflation, house prices declined year on year and quarter on quarter in the various regions and categories of housing during the quarter. Recent trends in house prices are believed to be affected by various factors related to the macro economy and the state of household finances.
The ratios of house prices and mortgage repayments to household disposable income, depicting the affordability of housing, were virtually unchanged in the second quarter. This was the net result of trends in house price and income growth during the quarter, while interest rates remained unchanged during this period. As a result, the affordability of housing remained favourable up to mid-2011.
Du Toit said that many households' ability to take advantage of these affordability trends was however still hampered by a relatively high level of indebtedness, impaired credit records, the impact of the National Credit Act and banks' resultant lending criteria.
The continued low growth in outstanding mortgage balances in the household sector is indicative of the impact of these factors on the residential property market, and the demand for and accessibility of mortgage finance.
On the back of rising headline consumer price inflation.
(I-Net Bridge) - House prices in real terms are expected to continue to decline for the rest of the year and in 2012 on the back of rising headline consumer price inflation, which is forecast to marginally breach the 6% level by the end of the year and for part of 2012 according to Jacques du Toit, property analyst at Absa Home Loans.
Du Toit said that based on house price trends up to the third quarter, and prospects for the economy and household finances, nominal price growth in the middle segment of the market was forecast to be well within single digits for the full year, projected at between 2% and 2.5%.
Absa Home Loans released their fourth quarter housing review report on Thursday, outlining trends in South African house prices and other property market related indicators up the third quarter of the year.
The report pointed out that SA's real economic growth came to a seasonally adjusted annualised rate of 1.3% in the second quarter of 2011, after rising by 4.5% in the first quarter.
Growth was influenced by global and domestic demand trends; the Japanese earthquake and tsunami, which negatively affected the local manufacturing sector as a result of supply shortages; and labour action in some sectors of the economy, which impacted production and service delivery. Real economic growth of 3.1% is projected for 2011, marginally higher than growth of 2.8% achieved in 2010.
Household income and consumption expenditure continued to grow in real terms in the second quarter, although at a slower pace as a result of rising inflation, which impacts consumers' spending power. The ratio of household debt to disposable income was somewhat lower at around 76% in the second quarter, which contributed to contain the cost of servicing debt against the background of low interest rates.
Du Toit said that many consumers were still battling with impaired credit records, negatively affecting their ability to take up credit, with this situation being reflected in continued low growth in household credit extension.
Trends in nominal house prices varied on an annual as well as a quarterly basis in the different segments of the market and geographical areas in the third quarter. In real terms, i.e. after adjustment for the effect of consumer price inflation, house prices declined year on year and quarter on quarter in the various regions and categories of housing during the quarter. Recent trends in house prices are believed to be affected by various factors related to the macro economy and the state of household finances.
The ratios of house prices and mortgage repayments to household disposable income, depicting the affordability of housing, were virtually unchanged in the second quarter. This was the net result of trends in house price and income growth during the quarter, while interest rates remained unchanged during this period. As a result, the affordability of housing remained favourable up to mid-2011.
Du Toit said that many households' ability to take advantage of these affordability trends was however still hampered by a relatively high level of indebtedness, impaired credit records, the impact of the National Credit Act and banks' resultant lending criteria.
The continued low growth in outstanding mortgage balances in the household sector is indicative of the impact of these factors on the residential property market, and the demand for and accessibility of mortgage finance.
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Property leviathan pulls millions from SA
Property leviathan pulls millions from SA
Bribery is driving Redefine out of SA; CEO says he is voting with his chequebook.
Marc Wainer, CEO of one of SA’s largest property listings – Redefine – has lashed out at “administrative practices” of local authorities. He has also come out strongly against bribery and corruption saying he is voting with his chequebook.
Redefine has a market cap of R22bn and total assets under management of about R37bn
In a chilling special report podcast with Alec Hogg on Redefine’s year end results for August 31 2011, Wainer said the giant property fund is not investing in areas where it has concerns about “administrative practices” of local authorities.
This decision was not taken lightly, says Wainer: “We are really committed to job creation but we are sick and tired of being used as the milking cow for some local authorities who simply increase our rates and taxes by astronomical amounts: 15, 16, 18% and there is either no improvement in services and in many instances a deterioration”.
This approach says Wainer is only being tolerated for properties it owns, because “we don’t have an alternative service provider.
“For the properties we are going to construct, we have a choice and we are now going to vote with our chequebooks and say enough is enough”, especially in the case of commercial and industrial properties.
He is also not going to invest in areas where bribes are expected, he cites Kopanong, the former Hammanskraal, as an example, where two years ago Redefine took a decision to expand one of its properties.
It wanted to build a free standing supermarket, add 26 shops plus a China Town and a new taxi rank, worth about R120m.
The first phase, the supermarket worth R40m has been completed but it came at a high cost. During construction in February, Wainer says the local community wouldn’t allow Redefine’s contractor on the site because it wanted the property leviathan to employ more people at three times the price of its current labour.
The local community were also divided in factions and threatened to destroy the buildings if necessary, reveals Wainer.
About ten days ago, as Redefine handed over the supermarket for beneficial occupation, a Redefine employee reported that nine local councillors had asked for R20 000 each or they would disrupt the site and not let Redefine back to complete construction.
Wainer said he would not pay 1c and the rest of the project has been canned, meaning that about R70m to R80m will now not be spent in Kopanong.
“I am voting with my chequebook.
"I don’t have the time and I can’t spend my people’s time in going through long and lengthy processes, laying charges, court cases, they come to nothing at the end of the day,
“We will simply spend our money elsewhere,” he said.
In fact the movement out of industrial and commercial properties has seen the fund’s exposure reduce to 4-5% of its portfolio from 20-23% before the unbundling of Arrowhead agreed to on Friday.
Wainer however says “it is not so much what we are left with - it’s the fact that we are not going to go into it anymore.”
Wainer says it can do this because its fund is “fortunately big enough and we don’t have to buy locally we have offshore alternatives. We are certainly not going to be blackmailed to pay people bribes corruption in order to expedite a process so we will rather just call it a day.
“We have just got to the stage, we have tried, we negotiate, we try to do things, we act in accordance with the law, the by-laws, the town planning and we are just frustrated and the tragedy is we are not creating jobs in the areas that need it”.
Wainer is however not completely dismissive of South Africa he says it may still consider investing in the Western Cape, which is the only local authority that has an “open for business sign”.
The Eastern Cape, North West and Northern Cape are “totally out”, he says.
Other provinces may be considered depending on the area, he adds.
He also suggests that local authorities should give companies like his that pay “R80m to R90m a year in rates and taxes a relationship manager... If we want to spend R500m or R1bn, don’t make us stand in the same queue and go through the same processes as someone who is spending R500 on bathroom alterations”.
Redefine’s full year headline earnings per linked unit were down 27%. The share price fell 0.9% to R8.
Bribery is driving Redefine out of SA; CEO says he is voting with his chequebook.
Marc Wainer, CEO of one of SA’s largest property listings – Redefine – has lashed out at “administrative practices” of local authorities. He has also come out strongly against bribery and corruption saying he is voting with his chequebook.
Redefine has a market cap of R22bn and total assets under management of about R37bn
In a chilling special report podcast with Alec Hogg on Redefine’s year end results for August 31 2011, Wainer said the giant property fund is not investing in areas where it has concerns about “administrative practices” of local authorities.
This decision was not taken lightly, says Wainer: “We are really committed to job creation but we are sick and tired of being used as the milking cow for some local authorities who simply increase our rates and taxes by astronomical amounts: 15, 16, 18% and there is either no improvement in services and in many instances a deterioration”.
This approach says Wainer is only being tolerated for properties it owns, because “we don’t have an alternative service provider.
“For the properties we are going to construct, we have a choice and we are now going to vote with our chequebooks and say enough is enough”, especially in the case of commercial and industrial properties.
He is also not going to invest in areas where bribes are expected, he cites Kopanong, the former Hammanskraal, as an example, where two years ago Redefine took a decision to expand one of its properties.
It wanted to build a free standing supermarket, add 26 shops plus a China Town and a new taxi rank, worth about R120m.
The first phase, the supermarket worth R40m has been completed but it came at a high cost. During construction in February, Wainer says the local community wouldn’t allow Redefine’s contractor on the site because it wanted the property leviathan to employ more people at three times the price of its current labour.
The local community were also divided in factions and threatened to destroy the buildings if necessary, reveals Wainer.
About ten days ago, as Redefine handed over the supermarket for beneficial occupation, a Redefine employee reported that nine local councillors had asked for R20 000 each or they would disrupt the site and not let Redefine back to complete construction.
Wainer said he would not pay 1c and the rest of the project has been canned, meaning that about R70m to R80m will now not be spent in Kopanong.
“I am voting with my chequebook.
"I don’t have the time and I can’t spend my people’s time in going through long and lengthy processes, laying charges, court cases, they come to nothing at the end of the day,
“We will simply spend our money elsewhere,” he said.
In fact the movement out of industrial and commercial properties has seen the fund’s exposure reduce to 4-5% of its portfolio from 20-23% before the unbundling of Arrowhead agreed to on Friday.
Wainer however says “it is not so much what we are left with - it’s the fact that we are not going to go into it anymore.”
Wainer says it can do this because its fund is “fortunately big enough and we don’t have to buy locally we have offshore alternatives. We are certainly not going to be blackmailed to pay people bribes corruption in order to expedite a process so we will rather just call it a day.
“We have just got to the stage, we have tried, we negotiate, we try to do things, we act in accordance with the law, the by-laws, the town planning and we are just frustrated and the tragedy is we are not creating jobs in the areas that need it”.
Wainer is however not completely dismissive of South Africa he says it may still consider investing in the Western Cape, which is the only local authority that has an “open for business sign”.
The Eastern Cape, North West and Northern Cape are “totally out”, he says.
Other provinces may be considered depending on the area, he adds.
He also suggests that local authorities should give companies like his that pay “R80m to R90m a year in rates and taxes a relationship manager... If we want to spend R500m or R1bn, don’t make us stand in the same queue and go through the same processes as someone who is spending R500 on bathroom alterations”.
Redefine’s full year headline earnings per linked unit were down 27%. The share price fell 0.9% to R8.
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More township malls on the cards
More township malls on the cards
Major developers are increasingly targeting sprawling townships which are seen as the development nodes of the future for both the residential and retail sectors. Many of these developments are concentrated around transport hubs like taxi ranks which by their very nature attract tens of thousands of commuters daily.
Country manager of International Housing Solutions (IHS), Rob Wesselo, says on the residential side 97% of the market is in under developed areas. Massive urbanisation has also contributed to increased demand for affordable housing. Two of IHS’s largest developments are in Soweto south west of Johannesburg.
On the retail side the Pan African Shopping Centre in Alexandra north of Johannesburg is but one example of a successful mall which is in the process of expanding due to increased demand from retailers and shoppers.
Entrepreneur and owner of the centre Tebogo Mogashoa of Tebfin Property, says major tenants seem less nervous about investing in areas like Alex with a sometimes dubious reputation as being unsafe. Mogashoa says Tebfin Property has similar projects in the pipeline in places like Eden Park and Daveyton on the East Rand. “We see ourselves as an upcoming developer in this space… focusing on retail development in under-serviced areas with the specific focus on emerging markets,” Mogashoa says.
He attributes the success in Alex to the buy-in from the community and local players like the taxi associations who are shareholders in the project. The centre’s focus is the bustling taxi rank which attracts people from near and far. “The development responds to the needs of the communities.”
Several reports have been written saying the mushrooming of malls is threatening small business – a sector seen as key in the creation of jobs. Mogashoa disagrees, saying small business and informal traders were consulted extensively prior to the launch of the development and came to realise how they could trade successfully alongside the more formal sector.
Mark Stevens, the MD of Fortress, says his company is focusing on the market that has large volumes of feet moving through it, whether it be the Johannesburg CBD, Diepsloot or the bustling Louis Botha Avenue close to the city, or anywhere close to a taxi rank. “It might be the township where there’s a taxi rank, but it might be a commuter point where we know there’s a train or a bus.”
Fortress’s market is the lower LSM which is commuter orientated. “This is the market we’re chasing wherever that market may be,” Stevens said.
He added that their market now had more disposable income and had high aspirations. “They want better quality and brands. A lot of the tenants that we deal with, you can see from their trading how they are doing, I’m talking your Shoprites, the Capitecs, Pep (and) Cashbuild (JSE:CSB)”.
And, according to Stevens, the future looks rosy: “Going forward we see a lot of growth in that market, the rentals are off a low base… as opposed to some of the shopping centres in Johannesburg with very, very high rentals.” He says while their trading densities might be larger, getting good growth out of them going forward will be difficult.
Major developers are increasingly targeting sprawling townships which are seen as the development nodes of the future for both the residential and retail sectors. Many of these developments are concentrated around transport hubs like taxi ranks which by their very nature attract tens of thousands of commuters daily.
Country manager of International Housing Solutions (IHS), Rob Wesselo, says on the residential side 97% of the market is in under developed areas. Massive urbanisation has also contributed to increased demand for affordable housing. Two of IHS’s largest developments are in Soweto south west of Johannesburg.
On the retail side the Pan African Shopping Centre in Alexandra north of Johannesburg is but one example of a successful mall which is in the process of expanding due to increased demand from retailers and shoppers.
Entrepreneur and owner of the centre Tebogo Mogashoa of Tebfin Property, says major tenants seem less nervous about investing in areas like Alex with a sometimes dubious reputation as being unsafe. Mogashoa says Tebfin Property has similar projects in the pipeline in places like Eden Park and Daveyton on the East Rand. “We see ourselves as an upcoming developer in this space… focusing on retail development in under-serviced areas with the specific focus on emerging markets,” Mogashoa says.
He attributes the success in Alex to the buy-in from the community and local players like the taxi associations who are shareholders in the project. The centre’s focus is the bustling taxi rank which attracts people from near and far. “The development responds to the needs of the communities.”
Several reports have been written saying the mushrooming of malls is threatening small business – a sector seen as key in the creation of jobs. Mogashoa disagrees, saying small business and informal traders were consulted extensively prior to the launch of the development and came to realise how they could trade successfully alongside the more formal sector.
Mark Stevens, the MD of Fortress, says his company is focusing on the market that has large volumes of feet moving through it, whether it be the Johannesburg CBD, Diepsloot or the bustling Louis Botha Avenue close to the city, or anywhere close to a taxi rank. “It might be the township where there’s a taxi rank, but it might be a commuter point where we know there’s a train or a bus.”
Fortress’s market is the lower LSM which is commuter orientated. “This is the market we’re chasing wherever that market may be,” Stevens said.
He added that their market now had more disposable income and had high aspirations. “They want better quality and brands. A lot of the tenants that we deal with, you can see from their trading how they are doing, I’m talking your Shoprites, the Capitecs, Pep (and) Cashbuild (JSE:CSB)”.
And, according to Stevens, the future looks rosy: “Going forward we see a lot of growth in that market, the rentals are off a low base… as opposed to some of the shopping centres in Johannesburg with very, very high rentals.” He says while their trading densities might be larger, getting good growth out of them going forward will be difficult.
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