Western Cape property price growth
In the first quarter of 2014, the FNB Western Cape House Price Index recorded year-on-year (y/y) growth of 11 percent from 8.8 percent in the previous quarter.
The report notes that the Western Cape CPI inflation accelerated to a 5.8 percent from 5.3 percent with the average price of homes transacted (those financed by FNB) in the Western Cape reaching R1 133 068 in Q1 2014.
Report writers, FNB Home Loans household and property sector strategist John Loos and property market analyst Theo Swanepoel, explain that in real terms the FNB Western Cape House Price Index remains well-above levels of a decade ago, up 26.1 percent from the first quarter of 2004., however, compared with last decade’s real average price peak, reached in Q1 2007, the first quarter of 2014 real price was still -16.8 percent lower.
In nominal terms, Q1 2014 average price was 106.8 percent higher than the first quarter 2004 price level but only 36.8 percent above the first quarter of 2007 level.
Agents’ qualifications raise the bar
Those who a few years from now look back on what the South African residential property marketing sector has undergone in recent years will have to accept, firstly, that a radical transformation has taken place in estate agents’ education and, secondly, that this has upped the professionalism and self-respect of agents to a greater degree than any other single factor.
This is according to Bill Rawson, Chairman of the Rawson Property Group, who says estate agents are traditionally proactive, go-getting people primarily interested in achieving sales and therefore likely to be averse to studying. However, that has now changed.
“When I visit show houses at weekends I often find agents studying up their next week’s lessons in between serving clients. It seems to me that they are proud that they are now acquiring a professional qualification on the same lines as financial advisers, asset managers and even lawyers for whom postgraduate education is becoming more and more important. It has been gratifying to many estate agents at last to be able to see themselves as possessing recognised qualifications - which are not that easily come by and which take a year to achieve,” says Rawson.
Top 5 electricity saving products
With winter’s imminent arrival, South Africans across the country will be looking for ways to combat electricity prices. Whether prepaid or open, electricity has been a difficult energy source over recent years in Southern Africa.
Sustainable.co.za has put together a list of products that can help consumers reduce both their electricity costs and carbon footprint during the chilly season.
Here are the top 5 practical products available online now:
Geysers can be responsible for up to 40 percent of your total electricity usage. As the water temperature drops throughout the day, the geyser is constantly reheating. A geyser blanket can cut this energy use by half.
How to approach property investments
When it comes to property investment, particularly when there is a large portfolio of buy-to-let properties, if the debt to equity ratio is high, this high risk level should be phased out over time.
This is according to Michael Bauer, managing director of IHPC estate agency, who says many property investment moguls’ advice would be never to pay off the bonds completely, as you need tax deductable expenses such as interest on the bond repayments. Further expenses to these properties that can be deducted are depreciation on the furniture and appliances, some renovation or improvement costs, levies paid, rates and taxes, insurance on the property, the rental agent’s commission, repairs and maintenance, legal fees and bank charges.
If the properties bought are registered in a business’ name, some of the director’s overheads as well as the expenses of running that business are also tax deductable.
Buying property jointly - our tax?
A Property24 reader asks:
A Property24 reader says he and his wife have jointly bought a rental property and wonders how tax will work.My wife and I have jointly bought a rental property, which will hopefully make a small profit from the first year. We received a 100% loan from FNB. My wife handles all the admin around the rental property, i.e. finding tenants, setting up contracts, etc. and all rental contracts are between her and the tenants. The rent is paid into her bank account.
Can all the income from this property be seen as her income for tax purposes? It doesn’t matter much now, but for the future, we would prefer to consider all the income as her income, because the rental income is her only income and thus she is in a lower tax bracket than me.
Johan Swart, tax manager at Legal & Tax, advises:
If the purchase contract was entered into jointly, the bond obtained jointly and the property registered in both parties' names, the rental income will have to be apportioned between both parties for tax purposes.
What to do about incompetent trustees
In many sectional title schemes, the difficulties encountered by bodies corporate and/or a lack of administrative experience can result in them becoming negligent.
This is according to Michael Bauer, the general manager of the property management company IHFM, who says the position of trustees can be a tough one in that they are working for no pay but often have to put in many hours, and it can cause some trustees to become disillusioned and non-caring. Inevitably they become lax about their responsibilities and fail to detect irregularities, and the scheme may then go downhill.
Bauer says if body corporate members find this happening they must make use of the Prescribed Management Rule 53 which allows them to call on the trustees to organise a special general meeting – provided that they (the members) can show that 25 percent of the scheme’s members are in favour of such a meeting.