About Me

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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
 
Please visit our website at www.prop-law.co.za for more details.
 
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
 
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.

07 January 2014

'Understand the macro-economic factors behind the property market'

'Understand the macro-economic factors behind the property market'

There are a number of external factors that affect the property market and changes its dynamics. Insight into these key factors behind the market will assist potential homeowner make informed property purchase decisions, says Adrian Goslett,of RE/MAX of Southern Africa.


•Just as the introduction of the Consumer Protection Act (CPA) proved, government legislation can have a remarkable influence on the property market. Other laws that have had an impact have been the changes to the Capital Gains Tax levels and the drop in transfer duties.

The more recent introduction of the Credit Amnesty Bill could also play a part in changing the property market dynamics as we know it. With the removal of negative credit information from credit bureau databases, more buyers may be eligible to enter property market, however this could also mean that credit will be offered at a higher cost in order for banks to be able to absorb the higher risk.


•Most home buyers will require finance from a bank to purchase their property. What this means is that these buyers will be affected by any fluctuations in the prime lending rate.

Even if homeowners choose a fixed interest rate for their bond, the rate given by the financial institution will be based on the current prime interest rate. The current interest rate of 8.5% has made property investment a far more attractive option for buyers who have the means to obtain finance. An increase in the rate, which is expected to happen sometime during this year, could negatively impact the property market as many consumers are already dealing with high levels of debt and the rising cost of living expenses.


•With the introduction of the CPA and the strict lending practises adhered to by financial institutions, bond approvals dropped from around 80 percent to well below the 50 percent mark. As banks have relaxed their approval criteria to some degree, the rate of bond approvals have improved, but are still not at levels seen during the boom. The banks' appetite for risk and their willingness to grant loans will impact the property market and the number of transactions.

Currently South African credit legislation dictates that a bond applicant's monthly bond repayment cannot be more than a third of their net income. Although not guaranteed, most applicants will also require some form of deposit for approval. Generally the deposit requirements range from 10 percent to around 30 percent, depending on mitigating circumstances.


•Economic factors such as the employment rate and inflation figures will have their impact on the housing market as they place pressure on the consumer. Generally speaking if the economy is suffering and experiencing negative trends, so will the housing sector as less consumers will be able to show the necessary affordability levels. Proof of this was seen in 2008 when the global economic crisis hit and the property market experienced a sharp decline.

The current economic environment continues to see improvement and this has filtered through to the property sector, with progressively higher sales volumes seen on a yearly basis since the end of the recession.

RE/MAX Press Release

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