Property24

Property 24/10 - 44

Cape Town's property prices boom
Wealthy people spent millions of rands buying property in the Western Cape over the festive season according to Cape Town estate agents who point out that about 60% of the deals in December and January were bond-free as the buyers paid cash for the properties.

Wealthy people spent millions buying property in the Western Cape over the festive season according to Cape Town agents, with about 60% of the deals bond-free.

Seeff sold a beachfront bungalow in Clifton for just over R20-million in December and Pam Golding Properties (PGP) says that it sold two bungalows on Clifton's Third Beach for just over R38-million. All these properties were sold for cash.

Two other cash deals, one at the V&A Waterfront worth R16-million and another in Mouille Point worth R13-million were also concluded as cash transactions.
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Gauteng, 40% won't own homes
About 60% of black households have paid for their homes compared with just 46% of those households from other race groups according to the South African Institute of Race Relations.

Research shows that many residents in Gauteng who benefit from relatively high salaries may never come to buy a property of their own.

Research shows that many residents in Gauteng who benefit from relatively high salaries may never come to buy a property of their own.
However, it does not necessarily imply that blacks are more diligent about paying debts but rather the higher property ownership figures could be explained by the transfer of government-subsidised houses to black people.

In the affluent provinces of Gauteng and the Western Cape, 34% of blacks and 42% of other races lived in houses that had been fully paid for. Just over 56% of the 13,8-million households throughout South Africa live in homes that are bond free.
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Buying to let in R250k to R500k band
The buy-to-let market in the R250k to R500k price range is the fastest-growing investment sector in the property market claims Michael Bauer, general manager of the sectional title management company IHFM.

There is always a risk that a tenant may default, but people in the lower income brackets are unable to buy their own properties and therefore tend to take a longer-term view when choosing a place to live, says Michael Bauer of the sectional title management company IHFM.

"Many investors are wary of this market because there is the mistaken perception that people who rent these properties are earning less and are more vulnerable than those with higher qualifications earning better salaries," he says.

He says that people renting these properties are typically a factory or municipal worker earning between R10k and R12k a month who have a spouse earning between R5k and R6k as well, providing joint income of up to R18k.
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Property sellers still unrealistic
Most people selling property appear to be ignoring the reality of a depressed housing market, with asking prices generally for property still way above what buyers are prepared to pay.

A further indication that sellers are not yet realistic about what their houses are currently worth, says Loos, is the fact that some 81% of sellers are having to ultimately drop their asking prices in order to make the sale.

Industry players say unrealistic asking prices is one reason why housing activity remains in the doldrums. Latest figures from the Pam Golding Properties (PGP) group show that overall property sales activity across South Africa has halved over the past five years - from a total number of transactions of 25 000 to 30 000/month down to the current 10 000 to 15 000/month.

Sales turnover has similarly dropped from a high of around R18bn/month at the height of the boom to the current R10bn/month. "It has been increasingly difficult to get buyer and seller to agree and to bring their respective expectations together. The market is characterised by a number of sellers still over-pricing their properties relative to current market conditions," says PGP CEO Andrew Golding.
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Western Cape is SA best province
With the mess that exists in the City of Joburg's billing system, coupled with tardy service delivery in other Gauteng cities, it's hardly surprising that the Western Cape has emerged as the top province when it comes to providing basic services.

The proportion of households receiving free basic services from municipalities was significantly higher in the Western Cape than in any other province in the country according to a survey undertaken by Statistics South Africa (StatsSA).

The results of StatsSA's findings are contained in the South Africa Survey compiled by the South African Institute of Race Relations. The figures show that 82% of indigent households in the province received free basic water compared with the national average of 58%.
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Crisis meeting - Jhb billing shambles
The billing crisis in Johannesburg has prompted the Co-operative Governance Minister, Sicelo Shiceka to summon the City of Joburg's MEC to a meeting this week to discuss the city's inability to provide residents with accurate accounts.

Democratic Alliance councillor Dave Dewes has initiated a class action lawsuit against the city manager, Mavela Dlamini, who is being sued for failing to perform his duties. So far about 40 people have joined but a further R25 000 is needed to secure the services of a senior advocate.

Shiceka says that he is considering introducing special legislation that would give the South African Revenue Services control of billing, collection of rates and service levies for all municipalities.

He says that billing and revenue collection is a national issue and should be the responsibility of agencies such as the SARS. Shiceka says that when he lived in Johannesburg he also received incorrect accounts and this made him as angry as those tens of thousands of Johannesburg citizens are right now.
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Building activity drops sharply
In November last year the number of building plans passed dropped by 30% and it fell further in December as well. This is a clear sign that things will remain tough for SA builders.

The real value of new residential buildings completed last year was 22,2% lower at R13,4-billion than in the previous year when the value of new buildings was R17,3-billion according to figures released by Absa this week.

Absa says that this is a clear indication that the building industry is experiencing strains and when combined with a drop in the number of building plans passed last year it is clear that things will not get better for this sector for some time.

The number of building plans passed from new houses, apartments and townhouses was down by 3,1% year-on-year in November after falling by 30% in the previous months say Jacques du Toit, senior property analyst at Absa Home Loans.
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Commercial property recovery?
State leasing contracts may give property investors a reliable cash flow, while sales of distressed commercial properties may mean that bargains can still be found.

The South African commercial property market is showing signs of recovery in the coming year with certain areas offering reasonable prospects for higher profits, claims Mergence Africa Property Fund.

"There is a cautiously positive outlook for investments in commercial property in South Africa with a number of bright spots around the country offering the potential for higher-than-average returns for investors," claims Mergence's Izak Petersen.

He says that property owners with the right black economic empower credentials will benefit from leases from government departments and state-owned enterprises. "These leases represent a low risk in the testing economic environment," says Petersen.
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