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FNB Property Barometer - 2nd Quarter Mortgage Lending Trends
FNB - South Africa
The tapering off the growth rate in the value of mortgage loans being granted continued in the 2nd quarter, according to SARB Quarterly Bulletin.

Some data adjustments to the two major new mortgage sub-sets, namely residential and commercial segments, from early in 2011 make analysis of segment data difficult. However, the residential sector, being the largest segment of the mortgage market, remains the key trendsetter for the overall mortgage market.
The new residential mortgage sector is one of the economy’s leading sectors. As such, one could expect that its growth rate has been tapering off for quite some time (similar to the broadly slowing growth rate that one finds in the new vehicle sector), with an economy slowing and possibly headed for recession, and with the major stimulus of aggressive SARB interest rate cuts in 2008/9 having worn thin. The SARB Quarterly Bulletin data regarding the total value of new mortgages granted therefore presents little in the way of surprises, showing further year-on-year weakening.
The declining growth trend more-or-less tracks, with a lag, the year-on-year change in the demand rating provided by the FNB Estate Agent Survey panel, and we believe that this is supportive of our view that, in an environment of weak residential property and mortgage demand, house prices will remain under pressure in the near-to-medium term.

Be aware of tax implications on property rentals
Moneyweb tax - South Africa
David Warneke provides useful tips.

Tourism Month, celebrated in South Africa annually in September, marks the contribution that the industry makes to the country's economy.

Alan Winde, Western Cape Tourism MEC has commented that figures from South African Tourism show that in 2009 the tourism industry contributed R67.990m to the country's economy. Many property owners take advantage of visitors to South Africa by renting their homes for prices often ranging anywhere between a few hundred rands per day to several thousands of rands.

The Income Tax implications of renting property must not be forgotten.

For tax purposes, the total amount of rental income made must be declared as ‘gross income' and will be taxed at the marginal rate. Against this, non-capital expenses incurred in the production of this income are deductible.  These include commissions paid to rental agents, interest on the bond, electricity, water and rates or levies over the period let, as well as the fees paid to a char or cleaning service. All such expenses need to be apportioned to cover the period to which the trade of letting relates.
Moneyweb tax

It is essential to understand how banks go about property valuations
Rawson - South Africa
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.

“A valuer is not there to check on the physical state of the property or what parts of it need repair.”

Bank and other valuers, he said, use a number of tools to do a market related price valuation, one of which will be a Comparative Market Analysis. This tries to fix a realistic value for the home by comparing it to similar properties in the area that have sold recently.

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