Rebound continues as 'competing home buyers drive up prices'
Signs point towards continued market recovery even without an added interest rate cut - however sought-after homes priced below R2.5 million are seeing some stiff competition from buyers.
Rawson Property Group says it has seen three consecutive months of exceptional performance in what has been one of South Africa’s most economically challenging years in recent memory.
“The current surge in market activity is due to the combination of record-breaking low interest rates, excellent value for money on offer, and very motivated lenders offering up to 100% bonds to qualified buyers,” says Tony Clarke, MD of the Rawson Property Group.
“We don’t foresee those conditions changing for several months at least. In fact, interest rates will likely drop again as we head into the new year, and only start to rise very slowly late in 2021 – nothing dramatic enough to offset the currently favourable buying conditions," says Clarke.
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How to sweat your assets to make money during a shaky economy
As the effects of a stagnant economy drag on, with forecasts now showing a dismal 10% contraction for 2020, many people are trying to minimise their exposure to a very shaky market.
While this may be good in theory, more and more many people are now trying to reduce their debt by selling homes and investment properties they shouldn't let go from their portfolios, at prices that are too low, just for quick liquidity.
Could you turn your commercial property into a shared space offering? Or a B-grade office space into affordable residential apartments?
These are just some of the questions property owners should ask to see if they could maximise or "sweat" their assets, to make extra money and strengthen their balance sheets.
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My tenant wants to buy, can the rental agent claim commission?
With the low interest rate at 7%, tenants are finding that it might be cheaper to buy than rent. Under the current conditions, a monthly bond instalment on a R1m property, which is transfer duty free, is just below R8k. At this point, many tenants might be approaching their landlords about a possible offer to purchase the property they've been renting.
It also raises the need for clarity around the agent's commission clause, often included in the rental agreement.
A Property24 reader recently noted what they called a 'double commission' clause in their rental lease agreement and wanted to know if this was acceptable.
"What is the general practice on this score? Our rental agent has put this clause into our lease, and we are not comfortable about the 'double commission'?" the reader wanted to know.
An example of this clause would read: “In the event that the tenant/occupier in terms of the lease agreement purchases the property, @@@@ Agency will be entitled to a 5% (Plus VAT) agent’s commission on the sale of the property, based on the selling price and payable by the Landlord”
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Here's how to buy a property without a home loan
Given the fact that few people have the resources to buy a property for cash, and almost half of bond applications are still declined by banks despite the low interest rates, many South Africans have likely wondered if there is another way of buying property.
The buyer must take transfer of the property anytime from one year after the date on which the contract is signed, and can settle or secure the full amount outstanding and take transfer of the property. The good news is, there is - it is called an instalment sale and about 5 percent of property sales are currently concluded in this way.
“Essentially, an instalment sale is simply an agreement, documented in a water-tight contract between a buyer and a seller that the buyer will pay off the purchase price in monthly instalments over a period of time,” says Meyer de Waal of MDW INC Attorneys.
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