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22 August 2013

Property barometer - Residential Building Outlook
FNB - South Africa
OUTLOOK

Judging by some mounting residential stock constraints in the existing home market, accompanied by a resumption of moderate house price growth in real terms (adjusted for CPI inflation) and a narrowing in the Residential Replacement Cost Gap, the residential building sector has probably been due for a slightly better run.

We therefore project slightly better building completions growth for the year 2013 as a whole, i.e. 7%, and a further improvement to 8% in 2014. While improved, such forecast growth rates remain moderate compared to the period 2002-2005, but that reflects the constrained economic times that we live in. The South African economy currently battles to grow at 2%, and there seems little prospect for further interest rate stimulus from the SARB in the near term.

Nevertheless, our forecast is for an improvement, and this may just in part alleviate existing residential stock constraints, thereby containing real house price growth. This could mean that another longer term trend could resume, i.e. real house price decline, which begun in 2008 but has stalled in 2012/13. We remain of the opinion that real house prices are due for further decline in the current “super-cycle”, being high by recorded history standards, and higher levels of new development would contribute to that possibility.
Building and Fixed Investment Review August 2013

Property Barometer - Residential Maintenance and Upgrades
FNB - South Africa
Conclusion

The Home Maintenance and Upgrades market appears to be a better place as of late.

The FNB Estate Agent Survey has pointed to further improvements in the levels of homeowner investment in their homes in the 1st half of 2013, and this may be having a positive impact on hardware retail sales too.

However, as yet they have not perceived any noticeable increase in the top category of home investment, namely “Value Adding Upgrades” to properties. Rather, they see the main improvement in the areas of “percentage of homeowners doing full home maintenance” and those doing “ full maintenance plus some improvements”.

And so, the FNB Home Investment Confidence Indicator continues to improve gradually. However, StatsSA building stats appear to already point to significant improvement in additions and alterations levels in 2013, which suggests that Value Adding Upgrades may already be on the rise.

Finally, the homeowner investment market would seem to be a “rational” place at present, with very little in the way of short term speculative behavior, with most improvements being done for own use by owners.
Residential Maintenance and Upgrades_August 2013

After sales service shows which agents are worth their salt
Rawson - South Africa
The real test of an estate agent’s ability and dedication is not so much how he markets and sells a property but how fully he is involved with the seller, the buyer and the conveyancer as well as certain other service providers after the sale has gone through. This was said recently by Tony Clarke, Managing Director of the Rawson Property Group.

“As soon as the sale document is signed, the seller will be expected to work through a range of tasks – and it is the estate agent who must ensure that he does this correctly and on time. If he does not, it is quite possible that certain suspensive clauses in the Deed of Sale will not be met on time – and it has to be remembered that if any due date is missed, it can make the deal invalid or, at the very least, result in difficult, awkward and prolonged delays.”
Rawson

Common property in older buildings often mistakenly listed on plans
IolProperty - South Africa
In 1977, when the first Sectional Titles Act came about, many buildings were converted into sectional title units but exclusive use areas weren't properly defined.

When the newer Act, in 1986, was drawn up, the old Act was converted but this aspect of managing exclusive use areas had still not been cleared up.

This has, many years later, created problematic situations where some selling a sectional title unit have been confused about what they own or can sell, said Michael Bauer, general manager of IHFM, the property management company.

There are many older apartment buildings in Sea Point, for example, where the parking bays have been passed from owner to owner, without knowing who owns the bays. What could have been a rented parking bay is sometimes mistaken for one owned outright and then 'sold' with the unit.
IHFM Press Release

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