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| RESIDENTIAL
PROPERTY NEWS |
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TIME
TO SEIZE THE MOMENT, SAYS DR ANDREW GOLDING
- Off the back of the hugely successful
Soccer World Cup, never before has South
African been presented with such an ideal
opportunity to promote the country to foreigners
as a prime investment destination, said
Dr Andrew Golding, CE of the Pam Golding
Property group, speaking at the IPD/SAPOA
Property Investment Conference held in Cape
Town on the 29 July 2010. Read
more here
HOW
YOU INTERPRET PROPERTY STATISTICS IS KEY
- Now perhaps more than ever, consumers
from all walks of life – whether aspiring
or existing home owners - are avidly interested
in the residential property market, and
they are faced with a considerable amount
of information imparted in the media, on
the internet or via advertising. Read
more here
‘GREAT
ESCAPE’ TO THE COUNTRY – LUXURY
MIDLANDS HOME ON THE MARKET - Many
city dwellers continue to exchange their
permanent location from one epitomised by
traffic congestion, high walls and restricted
space with a more desirable country setting
with wide open spaces and a tranquil ambience.
Read more here
ADVICE FOR FIRST-TIME HOME BUYERS
- When buying a home for the first time
there are a number of things to consider
before going house hunting. Read
more here |
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PROPERTY
OUTLOOK
By Stuart Murray,
Editor of IP
NO RATES
RELIEF
Warnings that
the current house price growth
may be nearing its peak are
not yet justified.
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RESIDENTIAL
LIFESTYLE PROPERTIES FOR SALE IN
SOUTH AFRICA: |
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| TIME
TO SEIZE THE MOMENT, SAYS DR ANDREW
GOLDING |
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Off
the back of the hugely
successful Soccer World
Cup, never before has
South African been presented
with such an ideal opportunity
to promote the country
to foreigners as a prime
investment destination,
said Dr Andrew Golding,
CE of the Pam Golding
Property group, speaking
at the IPD/SAPOA Property
Investment Conference
held in Cape Town on the
29 July 2010.
Changing Dynamics
Dr Golding’s
address was on the changing
dynamics in the residential
property market. “We
need to seize the moment,
because if ever there
was a time to present
our credentials to the
international community
of investors, it is in
the afterglow of such
a resoundingly successful
World Cup.
Direct Investment
“For the most part,
these foreigners will
see South Africa as an
opportunity and in return,
will bring much-needed
foreign direct investment
and create jobs - potentially
on a major scale - in
a process which in itself
may develop a momentum
of its own and become
a virtual self-fulfilling
prophecy of foreign direct
investment, job creation
and ultimately GDP growth,”
he said.
Dampened
Demand
From a residential perspective,
Dr Golding said while
the market has improved
(in terms of the number
of |
transactions) by about 30% off
the worst levels experienced
during the recession, there
is very little in the way of
real house price appreciation
and consumer demand remains
dampened by restricted access
to finance, which is also hampering
developers’ appetite for
risk.
Astute Investors
However, he said that rather
than take the view that the
residential property market
as an asset class is one to
be avoided right now allowing
time to pass for the market
to correct itself, it is at
times such as these when astute
investors capitalise on the
situation by making considered
acquisitions and achieving significant
returns. He said the leisure
market, which will clearly take
longer than the primary market
to recover, is a case in point
where prime coastal property
for sale currently presents
a desirable investment opportunity.
Residential Property
Funds
Amid recent debates about the
merits of residential property
funds, Dr Golding said the current
circumstances are favourable
for investment in such funds
as interest rates are at the
low end of their cycle, inventory
stock levels – both in
private and institutional hands
– are high and as a result,
the propensity for keen purchasing
is good, potentially locking
in early capital growth.
End of Down Cycle
The market is probably nearer
the end of the down cycle than
the beginning and in fact may
have already begun to turn,
while rental yields are likely
to increase off their current
low levels and capital growth
of a reasonable nature over
the next five to seven years
is a real possibility.
Recent Infrastructure
“Within the primary residential
market, South Africa’s
recent infrastructure upgrades
have provided new transport
nodes and created new residential
development opportunities, which
probably present some of the
best options currently available.
With ever-increasing traffic
congestion and a growing worldwide
trend around the convenience
of work, living and leisure
within the same precinct, these
transport nodes must be on the
right side of the supply and
demand continuum.
Gautrian
With the new Gautrain station
precincts clear examples of
these, it is anticipated that
this trend will only increase
as these nodes become fully
bedded down and the true value
and convenience of these transport
hubs becomes fully appreciated.
Uber-Prime Market
“One interesting niche
in the market that is potentially
worth looking at, both from
an individual perspective as
well as collectively, is the
so-called ‘uber-prime’
market – the top end of
the South African residential
market which is in the region
of in excess of R20 million
per opportunity.
Competing
Perceptions
“While
trading is naturally thin, the
best homes in Cape Town, Johannesburg
and Durban, i.e. the best of
the best, are now beginning
to compete both in terms of
price and perception with homes
of a similar nature in St Tropez,
London, Paris and New York.
These properties are competing
with each other and in world
terms are still under priced
and may represent buying opportunities
for savvy investors,”
said Dr Golding.
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Back to Top |
| HOW
YOU INTERPRET PROPERTY STATISTICS IS KEY |
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Now
perhaps more than ever, consumers
from all walks of life –
whether aspiring or existing
home owners - are avidly interested
in the residential property
market, and they are faced with
a considerable amount of information
imparted in the media, on the
Internet or via advertising.
Market Activity
Laurie Wener, MD of Pam Golding
Properties in the Western Cape
(Cape Town metropolitan) region
says: “The residential
property market is perennially
of great interest to the public
at large, and statistics and
trends, which are gathered from
various reliable sources –
mainly the Deeds Offices –
are sliced and diced by a variety
of commentators to project a
picture of market activity.
Misleading Interpretation
“However,
without sufficient insight and
interpretation, information
may prove to be confusing and
even misleading. For instance,
it is frequently reported that
the ‘average price in
an area has risen by X% over
the last quarter’. This
could imply that the actual
property prices have had capital
growth of X%, or that the market
activity may have moved into
a higher price band, while property
prices may in fact have remained
level or even decreased, as
can occur when mortgages become
difficult to obtain,”
says Wener.
An
Example
“Another
example is a statement such
as: ‘the incidence of
cash buyers has increased by
XX% over the last quarter’.
This could mean that out of
a specific number of buyers,
the proportion of those purchasing |
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for
cash has increased, or that
the total number of buyers has
reduced, possibly due to a reduction
in mortgage-dependent buyers,
with cash buyers therefore making
up a larger component than before.
Market Factor Influences
“Statistics published
often cover a very broad price
range of properties, resulting
in averages being calculated
from vastly varying values across
price bands. Coupled with this,
and at any given time, different
price bands may be influenced
by variable market factors.
As a result, this may mean that
they are not realistically reflective
of the segment of the market
to which the reader relates
or has an interest in,”
says Wener.
Recent
TV Interview
“A
representative of a statistical
bureau who was recently being
interviewed on a TV channel
said that property prices had
risen by 12%, and in the next
sentence reported that cash
buyers were buying ‘properties
of distressed sellers on auction
at 45% lower than current market
value’.
This
begs some questions:
| • |
Does the
12% growth figure include
the properties that were
sold ‘on auction
for 45% below market value’?
If so, then it suggests
that capital growth in
the general market may,
theoretically, be considerably
higher. |
| • |
If the properties
‘discounted’
on auction were omitted,
then this suggests that
the 12% growth figure
is inflated as not all
sales in the market were
included. |
| • |
Surely prices
achieved – whether
individually or collectively
and regardless of the
method of sale –
establish market value?
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| “To say
that there has been growth
of 12% when properties
are being sold at 45%
below market value is
a contradiction in terms
and misleading to the
consumer.” |
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Decreases
and Increases
Wener says the same interview
revealed that it is a statistical
fact that the number of Estate
Agency Affairs Board (EAAB)
registered agents has dropped
from approximately 85 000 to
25 000 over the past two years,
and that the average sales turnover
has increased from approximately
R2 million to R4 million per
agent.
Smaller
Pie
“This
was attributed by the interviewee
to being the result of fewer
agents sharing the pie. However,
consideration has to be given
to the following facts.
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Firstly,
the pie has also shrunk
considerably. |
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Secondly,
and independently of market
conditions, it is a statistical
fact that 20% of the agents
achieve 80% of the turnover
and possibly, or probably,
it is this portion that
has survived the trading
conditions and constitutes
the higher performers
anyway. |
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Conclusion
“For assistance with the interpretation
of statistics it is advisable to speak
to the principal of a reputable estate
agency or an experienced agent who
should also be able to provide you
with suburb specific trends and recent
sales date,” concludes Wener.
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Back to Top |
| ‘GREAT
ESCAPE’ TO THE COUNTRY – LUXURY
MIDLANDS HOME ON THE MARKET |
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| This
magnificent home in Eaglecrest
Wildlife Estate in the heart
of the KZN Midlands is on the
market for R8.5 million. |
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Lifestyle Choice
“They then either work from
home – enjoying the benefits
of modern communications technology,
retire to a quieter way of life, or
the main breadwinner commutes weekly
to work while the family resides in
a more peaceful and appealing environment,”
says Barbara Becker, Pam Golding Properties
area principal in the scenic KwaZulu-Natal
Midlands area.
Midlands
Meander
“We find
this trend evident in our picturesque
region, which draws home buyers from
all walks of life and which is home
to some of South Africa’s most
scenic landscapes with quaint villages
and an extremely popular Midlands
Meander.
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| The
scenic view from Eaglecrest
Wildlife Estate. |
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Eaglecrest
Wildlife Estate
“A property has become
available for purchase, which
is ideal for someone seeking
a spacious, luxury country home.
Situated within the exclusive
and established Eaglecrest Wildlife
Estate, which is set on 75 hectares
within a 1200-hectare game estate,
is a magnificent home that was
built with family and friends
in mind. With excellent security
and easy access to the premier
private schools of Hilton, Michaelhouse,
Treverton and Clifton, this
estate is in Mount West, just
nine kilometres from Nottingham
Road and the facilities of this
attractive country town, and
a 45-minute drive to Pietermaritzburg,”
says Becker.
Amenities
Bordering Boschoek Golf Estate,
Eaglecrest Wildlife Estate includes
4 magnificent trout dams, rolling
grasslands and indigenous forest
and has electric fencing, guardhouse
and 24-hour security.
Ample Accommodation
Set on an erf of 2994m2 the
property, which is currently
marketed by Pam Golding Properties
for R8.5 million, has ample
accommodation with 4 bedrooms,
3 luxurious bathrooms, exceptional
living/entertainment area, gourmet
kitchen, wine cellar, fireplaces,
air conditioning and superior
finishes. |
Buildings
The buildings comprise 700m2 and the
home is positioned above indigenous
bush with scenic sweeping views over
the trout dams, game estate and surrounding
farmlands and smallholdings of Mount
West. Gowrie Golf Estate is a short
distance away.
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Back to Top |
| ADVICE
FOR FIRST-TIME HOME BUYERS |
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When
buying a home for the first
time there are a number of
things to consider before
going house hunting.
Affordability
Says Annien Borg, MD for Pam
Golding Properties Boland
and Overberg regions: “Firstly
you need to establish the
amount you will be able to
afford, and this includes
your monthly repayment as
well as monthly costs incurred
as a homeowner, such as rates
and insurance, or a monthly
homeowner’s levy if
the property is in a residential
development or estate.
Associated Costs
“Then there is the cost
involved in transferring the
property into your name. Do
you have a cash amount saved
for a deposit, transfer duty
fees, bond costs, legal fees
and the cost of moving?”
Estate Agent Services
Borg says it is advisable
to consult a reputable agent
in the area in which you are
looking – someone who
knows the area well and has
a good reputation and track
record. Such an agent will
be able to assist you with
information regarding the
costs involved in the transfer,
while a mortgage originator
such as Ooba can assist you
in determining what home loan
you will possibly qualify
for. They can |
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do
a pre-qualification based on
your net income stated, but
bear in mind this is not granted
until all your information is
verified by the lender. If you
do go house hunting before you
are pre-qualified and find the
perfect home, you can make an
offer subject to obtaining bond
approval.
Mortgage Originators
“A mortgage originator
can assist you in obtaining
all the documentation needed
to apply for a home loan. To
be considered a good financial
risk by a lender, you need to
ensure you have a good credit
record and that all your accounts
are paid timeously. If your
credit record is not perfect,
but you have managed to save
10-20% for a deposit, a lender
should still see you as a good
credit risk. However, you should
ensure that whatever your monthly
payment is, that it is well
within your comfort zone,”
says Borg.
Do your Homework
“When you start looking
for a home to buy, in addition
to affordability, give thought
to your individual needs or
those of your family so that
you buy a property that suits
your lifestyle. Do your homework
on your selected area in regard
to security / crime, distance
from schools and workplace and
access to shopping and medical
facilities.
The Area
“Ask the agent about recent
sales of property in the area,
the average selling price and
growth in property values over
the past few years. Also enquire
if there is any future development
planned for the area which could
influence the price of the property
negatively or positively. If
you can, speak to those who
already live in the area.
Conclusion
“Buying a home is one
of the biggest investments you
may make in your lifetime, it
is well worthwhile to research
the area and market before you
look for a property, and ensure
it is within your price range,”
she adds.
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Pam Golding Property
Group Head Office:
Monterey, 12-14 Klaassens Road, Bishopscourt, Cape Town,
7708.
South Africa
www.pamgolding.co.za |
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