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15 January 2015

Don’t be scared to buy solo
RealNet - South Africa
Home ownership is not just for happy couples – even if the banks do seem to prefer having two names on the mortgage.

“All over the world, the percentage of single buyers is rising as more young people delay getting married until their 30s, and more single parents decide to buy homes rather than rent in order to give their children more stability,” says Jan Davel, MD of the RealNet estate agency group.

“The latest statistics from the US show, for example, that almost a quarter of all homebuyers now are single, with women leading men by about two to one. And locally, according to the FNB Property Barometer, single buyers currently account for about 19% of all home sales, up from 13% four years ago.”

And even if solo house hunting feels a bit daunting, he says, buying your own home now is one of the smartest decisions you can make, especially if you are secure in your job and committed to your location for the next few years, because both prices and interest rates are on a rising trend that will make it increasingly difficult for buyers of all sorts to qualify for home loans.
Don't be scared

Quality tenants are worth keeping, landlords advised
Trafalgar - South Africa
Rental accommodation is currently in strong demand in most cities and towns around SA, and landlords are entering 2015 in a good position due to a shortage of such properties - but they should not throw away their advantage by imposing unreasonable rental increases in the next 12 months.

“Despite recent decreases in the cost of food and fuel, most tenants are still feeling the pinch thanks to higher interest rates and much higher water and electricity charges,” says Andrew Schaefer, MD of leading national property management company Trafalgar. “And with further Eskom prices increases ahead as well as the other cost-of-living increases usually imposed in January, such as higher medical aid and insurance premiums and higher school fees, there is bound to be substantial resistance to rental increases that are perceived as unreasonable – that is, more than the current rate of inflation.”

What is more, he says, landlords need to take into account that there is also a shortage currently of quality tenants who pay on time and in full every month, with the latest available figures from the TPN Rental Payment Monitor showing that in the R3000 to R7000 a month category, which accounts for the majority of tenants, only 73% are currently paying on time and in full.
Quality tenants

SA homes market cycle set to turn in 2015 says Ronald Ennik
Ennik Estates - South Africa
“The South African residential property market moves in three-year cycles – and 2015 could mark the topping out of the most recent cycle,” says luxury home specialist Ronald Ennik, the principal of Christie’s International Real Estate-affiliated Ennik Estates.

“The momentum of the cycle change will be largely driven by how and when Eskom comes to grips with its power generation crisis,” adds Ennik.

“I have tracked the national homes market closely for the past 25 years, and indications are that the next cyclical downturn will probably manifest around mid-2015 – after the usual New Year holiday season uptick in buy/sell activity has come and gone.

“Following the financial crisis-driven dip and subsequent flat line in residential property from 2008 through 2010, the market has been on a steady, if unspectacular, growth path that is now close to topping out,” says Ennik.
Cycle Turn

House Price Indices
Absa - South Africa
Resilient middle-segment house price growth in the past two years
The average value of middle-segment homes in the South African residential property market has shown relatively strong growth over the past two years up to the end of 2014. Nominal price growth came to 10% in 2013 after relatively poor growth in the preceding year, with price growth of around 9% recorded in 2014. In real terms, i.e. after adjustment for the effect of consumer price inflation, annual house price growth of between 3% and 4% was registered in 2013 and 2014. 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 above mentioned house price performance came despite some challenging economic conditions experienced over this 24-month period, such as declining economic growth, low employment growth, a depreciating exchange rate and rising inflation and interest rates, which affected household finances. However, a situation of a normalisation of and more balanced housing demand and supply conditions are believed to have largely contributed to the price growth of the past two years. Against this background, the average nominal value of homes in each of the middle-segment categories was as follows in December 2014:

  • Small homes (80m²-140m²): R876 000
  • Medium-sized homes (141m²-220 m²): R1 201 000
  • Large homes (221m²-400m²): R1 837 000

House Price Indices Dec 2014

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