High bank interest rates criticised
Estate agents have criticised banks regarding prime plus charges of 6 percent on home loans for homes priced between R400 000 and R750 000.
At a recent Western Cape Franchisees Conference, Rawson Property Group chairman, Bill Rawson and his financial colleague, Mike van Alphen (a former Absa regional manager), used such phrases as ‘totally unjustifiable’ and ‘out of all proportion’ to describe the situation which has arisen in the mortgage bond market as it is applied to low end home buyers.
Rawson explains that in this market, for example, where most of the homes are priced from R400 000 to R750 000, certain banks are now charging prime plus 6 percent on mortgage bonds.
“Never before in the history of South Africa have banks worked on such flagrantly exaggerated mark-ups.
A 6 percent over prime interest rate equates to a 70 percent mark-up,” he says.
What to expect from an estate agent?
What, in good estate agencies, are regarded as the absolute essential contributions that an agent should be expected to make to the sale process?
Asked this question recently, Nancy Todd, Business Development Manager for the Rawson Property Group in the Western Cape, says the agent’s first task should be to help the seller set an achievable market-related price.
That, she says, is not nearly as simple a task as it appears for two good reasons - the first is that the majority of sellers, perhaps as many as 70 percent, will have value expectations that in today’s market are simply unrealistic.
These will be based on dinner table talk, on the occasional, above average sale achieved on certain out-of-the-ordinary properties and in some cases on fictitious figures fed to them by estate agents hoping to be mandated for the sale.
Often these agents will know that their valuation is over-optimistic but will foist it onto the client in the hope of adjusting it later.
Slowing house price growth trend
The latest statistics from ooba, South Africa’s biggest bond originator, show a marginal year-on-year house price growth of 0.7% to R836 055 in August 2012 and a month-on-month decline of 1.3% from R846 863 in July 2012.
“The slowing in house price growth over the past five months seems to be a trend influenced by current economic fundamentals,” says Saul Geffen, CEO of ooba. “However, ooba’s market experience is somewhat conflicting as both application intake and approved loans are significantly up on the prior year.”
Despite the slowing growth in average house prices, ooba is still reporting a 28% year-on-year increase in the value of home loan applications and a 44% year-on-year increase in the value of its home loan approvals in August 2012 indicating that the property market is still very active.
One cannot dismiss the effect of the changing mix of home loan applicants on average home prices, Geffen says. “For example, the percentage of first-time home buyers is at record levels of around 53%, and this changed applicant mix is continuing to favour the purchase of smaller more affordable properties, which may be influencing the overall house price trend downwards. This is demonstrated in the higher median house price growth recorded, which has averaged close to 6% over the past three months.”
Security and the value of your home
Home buyers are more security conscious due to crime statistics and the fact that many families have directly or indirectly been affected by crime.
For a large majority of home buyers in this country, security has become one of the most crucial influencing factors when deciding which home to purchase, says Adrian Goslett, chief executive officer of RE/MAX of Southern Africa.
“For this reason, properties with top-end security features that are located within security estates often fetch a higher premium than other types of properties and generally have a greater return on investment over the long term.”
He says it seems evident that the security of a home and its location, directly affect the perceived value of that property.
Goslett explains that due to the fact that a neighbourhood’s crime rate can have a negative impact on the value of their property, buyers should spend time researching the area and crime statistics before they invest.
Often more time and energy is spent on looking at the features of a home than the neighbourhood in which it is situated.
Prepare your home for show days
With summer on its way, and possibly busier show days, now is the time to prepare your home properly.
Make sure that your home’s security is up to scratch, that the overall appearance is good and that any maintenance needed is done before putting it on show, says Lanice Steward, managing director of Anne Porter Knight Frank.
It is sometimes best to ‘take stock’ and have a checklist of anything that needs to be done, she says.
Walk through your house and take note, room by room, of any temptations or anything that could cause a security breach, she says.
For example, do not leave the keys lying around or at the front door, says Steward.
“Keep all the spare remote controls for the garages and gates in a safe place, preferably out of sight, and make sure that sash windows close properly.”
For the duration of the sale of your home, put away any valuables that are small enough to be pocketed, she warns
Check inaccurate property valuations
With the new property municipal valuations set to affect property rates, it’s important for all homeowners to be aware of the true value of their properties.
Since 2009, the Cape Town City Council has been working closely with professional valuers, data collectors and statistical analysts, to deliver on the GV2012 project. The project will determine the municipal values of homes and effectively the property rates that should be paid, based on the values.
There will be a document known as the General Valuation Roll which will contain these values, and will be certified in January 2013.
On 1 July of this year, all 800 000 homes within the boundaries of the City of Cape Town were valued using a computer-assisted mass appraisal (CAMA) system, which was done for the purpose of ensuring fairness. However, these valuations may not be entirely accurate.
Design tips for eco-friendly homes
While many people are aware that they can help to save the planet while also saving themselves money if they 'go green', few really understand how to go about it.
Mandi Mac of Rawson Properties’ Fish Hoek franchise says a fair proportion of clients now accept that it would be ‘a good idea’ to live in a ‘green home’, one which reduces the consumption of energy and water, recycles its waste and needs relatively little maintenance.
However, she and ‘green’ architect, Jonathan Green of Green Integrated, say although people accept green concepts, they often do so in a vague way that reveals that they simply do not understand the subject.
On investigation it turns out that they have relatively little knowledge of the subject.
Furthermore, Green,who has a Master’s Degree in Sustainable Development, says if they are trying to buy such a home on the current market, they are likely to be disappointed as there are few genuinely green homes available for sale.
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