Buying property for investment
There are various kinds of property investment. Your home is an investment in that it provides you with rent-free accommodation. It may also yield a return in terms of increased value (a capital gain), although that gain may be difficult to realise unless you trade down or move to another region or country where property is cheaper.
Of course, if you buy property other than for your own regular use, e.g. a holiday home, you will be in a position to benefit from a more tangible return on your investment. There are four main categories of investment property:
- A holiday home, which can provide your family and friends with rent-free accommodation while (hopefully) maintaining or increasing its value; you may be able to let it to generate supplementary income.
- A home for your children or relatives, which may increase in value and could also be let when not in use to provide an income.
- A business property, which could be anything from a private home with bed and breakfast or guest accommodation to a shop or office.
- A property purchased purely for investment, which could be a capital investment or provide a regular income, or both. In recent years, many people have invested in property rather than shares or savings to provide an income on their retirement.
Agents understanding property values
The property media have done an excellent job in educating and informing the general public on property matters and their increased knowledge has become apparent in the questions they put to agents and the requests they regularly make for carefully researched information to back up the agent’s statements.
Nevertheless, says Rob Lawrence, National Manager of Rawson Finance, the Bond Originators for the Rawson Group, many surprising “patches of ignorance” still exist – one of which concerns the valuing of property.
“South African valuers,” said Lawrence, “operate to international standards, but this does not mean that all valuations will be the same or be what the agent, seller or buyer feel they should be.
The most important fact to grasp, he said, is that the bank valuer is there to assess how the property rates in relation to the price being paid for it, i.e. how much security its value offers the bank.
How do households acquire assets?
A comprehensive study of the financial well-being of South African households is to be undertaken by the University of South Africa’s personal finance research unit.
It is trying to assess how households used their income to acquire assets and how these assets were financed.
Professor Bernadene de Clercq, head of the research unit, says that it is common knowledge that spending within the South African economy is driven by households and there is a wealth of information available about income levels and expenditure.
However, she says, the research unit now wants to construct a balance sheet of assets and liabilities of all South African households. She says this information will assist policy-makers in drafting new policies that are based on sound research.
Rental leases: what you should know
It is important for tenants to understand the information contained in rental leases as prescribed in the Consumer Protection Act.
Q: Have just signed a rental lease and paid the required deposit. Less than 48 hours later, I found out that my work load will be reduced, as a result, will not be able to pay the monthly rental as per the lease. Can we get our deposit back as we have not yet moved into the property?
Using glass in the kitchen
Installing coloured glass splashbacks in kitchens and bathrooms has become a very popular trend, and it is easy to understand why. Apart from offering a stunningly stylish aesthetic, glass boasts a number of other benefits too.
Including the fact that it is quick and easy to install, it is easy to keep clean as there are no grout lines, it is a supremely hygienic non-porous material which requires no maintenance at all and it is available in a very wide variety of colours.
If you are interested in installing a coloured glass splashback – here are some tips and advice that could be very useful to you:
Lagoon Bay court case underway
A Western Cape High Court hearing into the Lagoon Bay Lifestyle Estate development near George got underway on Friday as the developer appeals against the decision of the provincial MEC for environmental affairs and development planning, Anton Bredell to refuse permission for the project.
The developer wants to set aside Bredell’s ruling not to allow the agricultural land to be rezoned or for it to be sub-divided into residential plots. It also wants the Court to declare that the George council has the sole and exclusive authority for the approvals process.
The municipality originally approved the rezoning and sub-division application pending approval from the provincial authorities. The project was given a conditional approval based on amendments to the structure plan by the then MEC for the environmental department, Tasneem Essop.
Global house prices continue to fall
Global house prices increased by only 1.8 percent in the year to March, the lowest annual rate of growth recorded since Q4 2009. Pam Golding Properties reports that Cape Town's Atlantic Seaboard area including City Bowl, remains relatively recession-proof.
According to the Knight Frank Global House Price Index Q1 2011, in regional terms, Asia remains the top performing continent recording 8.4 percent growth over the last 12 months. This is down from 17.8 percent a year earlier.
Liam Bailey, head of residential research at Knight Frank told Property24 that overall, price growth for the countries tracked within the index has remained in positive territory since Q4 2009.
This he says has been largely as a result of the Asian housing market boom, which led in some cases to annual price inflation of between 30 and 40 percent in locations such as Hong Kong and Singapore.
“The anti-inflationary measures taken by Asian governments to cool their overheated housing markets in 2010 and 2011 have started to take effect and this has had a dampening effect on the index’s overall price growth,” says Bailey.
Interest rates already rising?
The reluctance of banks to provide loans at less than the prime interest rates means that home loans are already costing buyers more.
Banks have stopped providing interest rate concessions on new loans and in essence this means that people are paying more for their bonds than in previous years according to Rudi Botha, chief executive of bond originator, Betterbond.
He says this means that home loan rates have effectively started to rise. He says indications are that the South African Reserve Bank will soon hike its basic lending rate to banks, effectively pushing up the prime rate for borrowers.
He says that banks are likely to increase the cost of home loans because of the pressure on their own margins coupled with new capital ratio requirements imposed through Basel III
Botha says that as a result, his company is urging prospective buyers not to delay buying a home as they can still secure a reasonable interest rate at prices that are particularly low and this will mean significant savings over the life of the loan.