Housing market steams ahead despite rate increases
BetterBond - South Africa
This year’s interest rate increases have done very little to slow housing demand, and have had no negative effect at all on home prices, according to the latest statistics from BetterBond Home Loans, SA’s leading mortgage origination group.
These show, says CEO Shaun Rademeyer, that the average home purchase price increased 6,33% in the 12 months to end-October to R915 678, while the average purchase price for first-time buyers rose 4,76% to R645 007.
“And lending by the banks has kept pace with this growth. For a start, the percentage of purchase price required as a deposit has declined over the past 12 months by 3,53% on average – and by 2,41% in the case of first-time buyers – which makes it easier for buyers to save up the cash they need to complete home purchases.
Keep your home safe this summer
Chas Everitt - South Africa
Although some types of crime have decreased, the latest SAPS statistics show that the number of home robberies/ burglaries has risen by some 70% over the past nine years. What is more, summer is the worst time of year for such crimes, with research by Yale showing that indoor burglaries increase by at least 10% in this season, and outdoor burglaries by 41%.
So you may want to take some extra precautions over the next few months to keep your family and possessions safe, says Berry Everitt, MD of the Chas Everitt International property group,
And writing in the latest Property Signposts newsletter, he suggests that you should start by taking advantage of some relatively inexpensive technologies that can be linked and added to as your budget allows. These include:
* A good burglar alarm, as its shriek will often be enough to send would-be burglars running. It can also be linked to an armed response service and/ or your neighbourhood watch network;
Keep your home safe
Five good reasons to preserve your home equity
Chas Everitt - South Africa
With interest rates on an “upward trend”, homeowners are once more being encouraged by all and sundry to use the equity they have in their homes to pay off or reduce higher-interest rate debt such as car finance, credit card balances and personal loans.
Which would be fine, says Berry Everitt, MD of the Chas Everitt International property group, if the economy was robust and home prices were rising fast. “As it is, however, the economy is fragile and the rate of home price growth has been slowing down for several months, so a much more conservative approach is indicated.”
Writing in the latest Property Signposts newsletter, he says that tempting as it may be to “consolidate” all their debts into a home loan, consumers need to remember what happened to homeowners who did this when interest rates began rising just before the global economic crisis in 2008.
“As property values slumped following that crisis, many of these owners ended up owing more on their homes than those properties were worth – and had to ‘pay in’ if they wanted or needed to sell them. So caution is advised, even though we’re not expecting another slump at the moment.”
5 Reasons to preserve home equity
Many challenges faced by developers of affordable housing
IolProperty - South Africa
The challenges in freeing up land for affordable housing is difficult due to excessive premiums being levied on land, says Shiraaz Hassan, commercial director for Asrin Property Developers. Previously development rights were quite restrictive but the City of Cape Town's new densification policies is encouraging high density schemes.
There are challenges, however, in the enormously drawn out zoning process, which could take up to three years before a scheme is approved. A negative aspect is that the affordability profile of the segment identified for a particular development changes and in some instance deteriorates over such a prolonged period of time, resulting in developers being forced to remodel the conceptual spatial development plan.
In addition to approval of schemes taking such a long time, end user banks are amending their scoring affordability assessments quarterly, which impacts the initial viability prepared for the buyer.
"This is unfortunate as these undetermined policy changes are not controlled by the developers, so the affordable segment, whilst demand is huge here, would be quite a risky segment to target unless you as a developer have secured your rights and understand how it is that local and provincial government can support your scheme and qualify developments as affordable housing," said Hassan.
House price indices
Absa - South Africa
Middle-segment house price growth slowing down
The middle-segment of the South African residential property market saw year-on-year growth in nominal home values starting to slow down in recent months against the background of a declining trend in month-on-month price growth since January this year, which accelerated after May (see graph below), and a fair amount of financial strain experienced by consumers. In real terms, i.e. after adjustment for the effect of consumer price inflation, year-on-year house price growth was in positive territory in the first nine months of the year. However, real price growth remained in low single digits during this period, impacted by consumer price inflation averaging 6,2% year-on-year (y/y) in January to September. These price trends are according to the Absa house price indices, which are based on applications for mortgage finance received and approved by the bank in respect of middle-segment small, medium-sized and large homes (see explanatory notes).
The average nominal value of homes in each of the middle-segment categories was as follows in October 2014:
- Small homes (80m²-140m²): R843 000
- Medium-sized homes (141m²-220 m²): R1 173 000
- Large homes (221m²-400m²): R1 818 000