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4 June 2015

Will house prices fall by early 2016?
HomeBid - South Africa
A HomeBid survey of leading property economists’ outlooks on interest rate rises and the possibility of house prices falling in early 2016 has found unanimity in the expectation that interest rates will be raised gradually in the third quarter of 2015 by 25 basis points and by a cumulative 75 basis points in 2016, as posited by Absa Home Loans property analyst Jacques du Toit.

On the question of whether house prices will fall on the back of those hikes, views varied little that house prices will show little if any growth nominally in 2015 and into 2016 with FNB household and property sector strategist John Loos’s view of our being at the beginning of a “real house price correction” over the long term the most thought provoking.
HomeBid Survey - June 2015

Residential Property Indices
Lightstone - South Africa
Market Review

The number of building plans passed is increasing and this may lead to the current stock shortage being corrected in the coming year.

The trend in 2014 shows that there was an increased proportion of higher valued properties trading every quarter indicating that there might be a small portion of the low and middle market buyers trickling into and increasing activity in the higher value markets. This increased activity might also lead to some price growth recovery in the coming months. A less positive trend is that the average holding period in the highest value market segment seems to be declining which may indicate that downscaling is taking place in this market.

Since the second half of 2014, FNB have significantly reduced the average LTV on loans, while SA Homeloans increased to an average of nearly 95%. SBSA had an increase in foreclosures over the last 6 quarters and with banks realising a higher proportion of property values under distressed conditions the Lightstone distressed sales factors increased for all market segments since the start of 2014.
Lightstone Residential Property Indices

Absa Home Loans wants to regain lost market share
IolProperty - South Africa
Absa Home Loans has regained its appetite to grow its market share after a turnaround towards sustainable profit growth after incurring a loss of R1.5 billion in 2012. Carel Gronum, the managing executive of Absa Home Loans, said yesterday it aimed to increase its market share of the total home loans market from 20 percent at the end of last year to 25 percent by 2017.

Absa was market leader of the South African home loans market with a market share of 30 percent at the height of the last property boom in about 2006 and dropped to 16 percent in 2012. But Gronum stressed the ambition by Absa Home Loans to grow its market share was "not an overnight flash in the pan where we throw all prudent considerations overboard in striving to get to 25 percent" market share.

He said the focus would be on prudent lending to creditworthy customers with high-quality collateral.
IolProperty

Buying a property via a trust is not just for the wealthy
Rawson - South Africa
Trusts are one of those financial tools that are somewhat shrouded in mystery for a lot of people. They are often dismissed as complicated, expensive, or reserved for the wealthy elite, and assumptions like these frequently prevent the average person from exploring the benefits a trust can provide.

“Trusts can be an excellent financial tool/conduit for people of all types and income-levels,” says Calum Wedge, Financial Director at the Rawson Property Group. “They are actually very easy and inexpensive to set up, and when they’re properly administered, they can be an effective and affordable way to protect, preserve, and distribute income generated by a variety of asset types, including property.”

According to Wedge, one of the major benefits of buying property via a trust is separation of ownership. “A trust is considered a legal entity, not a legal persona or juristic person per se and best described as a legal relationship created by a founder by placing assets under control of trustees,” he explains. “That means any asset owned by the trust – assuming it was purchased responsibly and signed off by an authorised trustee – no longer forms part of an individual’s personal portfolio, and can’t be attached by personal creditors or executors of their estate. This is particularly valuable for business owners who want to protect their personal assets should their businesses go under.”
Rawson

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