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2 March 2017

Property value affects rates and taxes
ReMax - South Africa
Each month homeowners receive a bill for the rates and taxes applicable to their property, but what are these municipal rates used for and how is the amount worked out?

Municipal property rates are financial liabilities that owners of immovable property are required to pay monthly for basic services that their local municipality provide, says Adrian Goslett of RE/MAX. Some of these services include maintenance of roads, street lighting, storm drainage, sidewalks, schools, fire fighting and so on.

Utilities such as water and electricity do not fall under property rates and are charged separately. Goslett adds that the revenue received from property rates is used to fund services that will better the lives of those living in that particular community. "Since the introduction of the Municipal Property Rates Act on 1 July 2008, local municipalities are obliged to value and rate immovable properties within their area of jurisdiction. The objectives of the Act are to ensure that the local municipality has enough revenue to provide the public with the basic requirements to run the area, along with ensuring long-term sustainability, enhancing the developmental agenda of the municipality, and addressing some of the imbalances caused by past policy," says Goslett. "Property rates provide the municipality will a reasonably reliable income that can be used to improve the local community and ensure it is well-maintained over the long term."
Property rates and taxes

What's in store for real estate in 2017
Rawson - South Africa
On average, the property market across South Africa experienced a notable decline in growth over the course of 2016, with the year-on-year house price inflation rate dropping to a mere 1.6% in December 2016. This has been attributed mainly to slow overall economic growth and the effects of gentle but regular interest rate increases between 2014 and 2016. In addition to this, South African consumer confidence fell by 7 points to a dismal -10 over the festive season, resulting in some justifiable concern for the future of the property market this year.

“There is no doubt that the market has entered into a period of slower growth after a long, positive trajectory,” says Tony Clarke, Managing Director of the Rawson Property Group. “That contrast alone can make the current property climate seem worse than it really is. Appearances aside, however, the economic factors that contributed to the decline have already seen some recovery in early 2017, and that could translate into stronger overall house price growth by the end of the year.”
Rawson

Credit and mortgage advances - Jan 2017
Absa - South Africa
Declining growth in household credit and mortgage balances in early-2017

The first month of 2017 saw the value of outstanding credit balances in the South African household sector rising by a much subdued 0,6% year-on-year (y/y) to R1 494,2 billion, after growth of 0,7% y/y at end-2016. This continued low growth in credit balances, which came to its lowest level since the start of 2002, occurred against the background of slowing growth in secured credit balances, whereas unsecured credit balances contracted further in January. Unsecured credit balances continued to be affected by certain data distortions (see the explanatory note in this regard).

The value of household secured credit balances (R1 143,0 billion and 76,5% of total household credit balances in January) showed growth of 2,2% y/y at the end of the first month of the year (2,3% y/y at the end of December last year). The further slowdown in growth in secured balances was the result of lower growth in household mortgage balances (see below), whereas instalment sales balances (21,5% of total household secured balances), contracted by 0,9% y/y up to end-January. This was the seventh consecutive month that instalment sales balances contracted on a year-on-year basis, which came on the back of depressed new vehicle sales volumes in recent times.
Credit and mortgage advances

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