Joburg finances stable but billing is still a bugbear

Joburg finances stable but billing is still a bugbear

The City of Joburg has received another qualified report from the Auditor-General for the 2011/12 financial year.

And the billing problems are cited as one of the reasons for this, together with the city's asset register.

Announcing the report, the city's member of the mayoral committee for finance, Geoff Makhubo, said many of the A-G's concerns had already been addressed and that good progress had been made in resolving the billing "challenges".

The problems identified with billing related to estimates and meter readings.

"Challenges lie with the fact that the system is based in historic records of consumption by residents which are being thrown out by the computers. The A-G said it is taking too long to resolve these," he said.

In terms of the Road Revenue Map released in November 2011, of all queries ringfenced by that month, 99 percent had been resolved.

As far as current queries are concerned, city manager Trevor Fowler said 90 percent were being resolved in 90 days. The average time of resolution of queries was 36 days, and it was hoped to reduce this to 30 days.

"The city's finances are stable, our capital expenditure is at 89 percent and we have R5 billion surplus," he said.

City auditor Quentin Green said the council's cash and cash equivalents had risen compared to the previous financial year due to improved liquidity management strategies implemented during the year.

He said the city was committed to pursuing:


•Improved and accurate billing;

•Improved cash collection of rates and services;

•An increase in expenditure levels for maintenance;

•Elimination of expenditure;

•Profitability and liquidity rates;

•Renewal of IT systems and an integrated accounting database; and

•An unqualified audit.

The Star

Next property peak 'about 5 years away'

Next property peak 'about 5 years away'


Historical trends suggest that the South African property sector experiences a boom about every 10 years, with significant construction booms occurring every 20 years.

The property cycle peaked in the early 1980s and the property market continues to feel the after math of the latest investment and construction boom of 2001 to 2007. Although the next peak in the market is at least another five years away, investors should see a steady improvement in market conditions during 2013 and 2014. In commercial property this will be reflected in a gradual lowering of vacancies and a rise in real rentals.

Yet the timing and shape of the next upward cycle will be dictated by the performance of the macro economy, interest rate movements and the sector's ability to maintain a balance between demand and development activity.

Over the past five years the market has experienced spurts of positive performance which mirrored periods of declining interest rates. The lowering of interest rates since 2010 helped maintain levels of affordability in the housing market, and also increased demand by investors for listed property.

With interest rates largely expected to remain constant in 2013 and most of 2014, the performance of the property sector will increasingly be driven by economic growth prospects, the strength of household balance sheets and fundamentals in the property market. But continued poor performance of the Eurozone economy and revised downward forecasts for the Chinese economy has dampened South African growth prospects. The strong consumption expenditure, which provided an important catalyst for the retail sector of the commercial property market, is starting to wane.

In 2013, residential property values are expected to increase by 5 percent to 6 percent and will therefore show little real growth. Investors in commercial property will primarily be focused on maintaining returns through a reduction of vacancy rates and operating cost escalations. In the third quarter of 2012 average vacancy rates for A-grade office properties in Braamfontein, Johannesburg, reached a 10year high of 19.9 percent. In Cape Town's Claremont office node A- grade office vacancy rates increased from 8.3 percent in the third quarter of 2008 to 17.7 percent in the third quarter of 2012.

It is unlikely that rental increases in the office sector will rise in real terms until of f ice vacancies decline to below 8 percent.

Although the market will be operating in an uncertain macro-economic environment in 2013, the slowdown in residential and commercial building activity will result in supply being gradually mopped up as the year progresses.

Investors should also start to experience a market that is gradually moving up the property cycle, with the peak of the cycle still some distance away.

Francois Viruly is Professor in the Department of Construction Economics and Management at UCT.

Weekend Argus (Saturday Edition)

85 percent of properties sell below asking price

This is an interesting statistic.  On the surface, it would appear that it is a bad thing (economically speaking) that 85% of sellers fail to achieve their asking price.  However, I look at it slightly differently.  Normally a seller will say: "I want X amount but will accept nothing less than Y amount."

I have recently been watching Million Dollar Listing NY (DSTV Channel 117 in South Africa), and although Reality TV is not Reality, I have yet to see a single seller (both developers and private sellers) achieve their asking price.  This encapsulates what I have experienced in practice.

As I said, my perspective is slightly different and my question therefore is: "How were the unfortunate 15% suckered into paying full price?

Gareth Shepperson




85 percent of properties sell below asking price
The perceptions of estate agents about activity levels in the residential property market in the near future have shifted and deteriorated significantly, the latest FNB estate agents survey shows.

FNB household and consumer sector strategist John Loos said agents reported only a mild weakening in demand activity in the residential property market in the fourthquarter survey, but had become a little less optimistic about the near-term future.

Far fewer agents perceived any positive consumer sentiment in the market and their perceptions might be starting to reflect the significantly weaker economy late last year, which was severely disrupted by strike action in certain sectors, he said.

The survey revealed that 16 percent of estate agents cited "economic stress or pessimism" as a factor influencing perceptions of near-term activity levels while only 1 percent perceived an environment of "consumer positive sentiment".

Loos said this represented a significant swing from 14 percent citing "consumer positive sentiment" in the third quarter and 11 percent citing "economic stress or pessimism".

Agents also still pointed towards very significant financial pressure, which manifested itself in the still high percentage of sellers downscaling due to financial pressure.

Agents indicated a mild improvement in the percentage of sellers downscaling due to financial pressure to 18 percent in the fourth quarter from 20 percent in the previous quarter, Loos said, but stressed the importance of this indicator of financial pressure declining significantly before the next interest rate hiking cycle.

The average time a house remained on the market before being sold declined last year, suggesting greater price realism in the market.

However, the percentage of properties sold at less than the asking price remained virtually unchanged at 85 percent in the last quarter.

Loos said the average time a property remained on the market before being sold declined to 15 weeks and four days in the fourth quarter from 15 weeks and six days in the previous quarter, a significant improvement on the 17 weeks and four days in the second quarter.

This was an encouraging development and suggested some improvement in the level of pricing realism and balance between demand and supply.

However, Loos added that the average time a property remained on the market before being sold at the end of last year still remained too long to represent a strong market.

Far fewer agents perceived any consumer positive sentiment in the market.

Despite agents reporting that properties were spending a shorter period on the market before being sold, they estimated there was only a very slight decline in the percentage of sellers who were required to reduce their asking price to conclude a sale, he said.

Loos said 85 percent of properties were sold at less than the asking price in the fourth quarter, which was insignificantly different from the 87 percent in the second quarter and 84 percent in the third quarter.

The average percentage sellers were required to reduce their price to conclude a sale had moderated mildly from a 13 percent cut in the second half of 2011 to 10 percent by the second quarter of last year.

Overall agents had painted a picture of a better residential property market last year than in 2011 but also started hinting that they were seeing signs of a weaker economy late in the year, which could, of course, be a negative drag on residential property, Loos said.

Business Report

Fais Ombud finds Sharemax directors liable for investor's loss

Fais Ombud Noluntu Bam has found four Sharemax directors liable for an investor’s loss.

The determination is unusual because it is normally only financial advisers who are held liable for bad investment advice.

However, in a lengthy determination, Bam has set out why she believes the Sharemax directors should be held accountable. The determination was signed on Tuesday. It can be downloaded in two parts here:

PART ONE

PART TWO


The determination could pave the way for thousands of other investors to claim losses from Sharemax’s directors.

For the full Moneyweb Article, go to:
http://www.moneyweb.co.za/moneyweb-special-investigations/fais-ombud-finds-sharemax-directors-liable-for-inv


Gareth Shepperson