Smaller houses showing the strongest growth
Rode - South Africa
According to the latest Rode’s Report on the SA Property Market smaller houses are showing the strongest growth.
The report analyses FNB’s house price indices for different sizes of full- and sectional-title homes and finds that the prices of smaller houses are not only accelerating faster but are also showing stronger growth relative to larger houses. Erwin Rode, property economist and CEO of Rode & Associates, explains: “The prevailing low economic growth environment and the uncertainty it brings to household finances, as well as tight credit criteria of banks, might be forcing buyers to scale down - especially first-time buyers.”
Nevertheless, over the past year, a slight softening in the credit standards of banks seems to have buoyed house prices in general, which explains why they are, in general, again showing growth slightly in excess of inflation. However, headwinds in the path of house prices remain, for example weak growth in formal employment, waning growth in household after-tax incomes and still-high levels of household debt. What’s more, despite the Bank’s decision to keep interest rates steady at the September meeting, the Monetary Policy Committee remains of a view that interest rates will have to normalise again. That the consumer is under unrelenting stress, is confirmed by residential rentals that, according to Rode’s research, have been growing at about half the inflation rate.
Do your sums before you downscale
Harcourts - South Africa
If you’re thinking of moving to a smaller home that is easier to manage and more secure, you might need to “downscale” more than you thought to make the move worthwhile according to Richard Gray, CEO of Harcourts Real Estate, who notes that about one in four home sales these days is being made by empty-nesters hoping to downscale from a family home and hopefully cut costs while also improving their personal security.
“However, the latest housing review from Absa illustrates that there is really not that much benefit in moving from a medium-size house to a small house at the moment. It shows that the average price of a pre-owned, medium-sized home achieved year-on-year growth of 6,9% in August this year to R1,14m, while the average price of a small home grew 11,4% to around R824 000.
“And using these values, the costs of selling a medium-sized home and buying a small one would total around R124 000, including selling commission, bond registration, legal fees and transfer duty – which would leave just over R190 000 to cover a deposit on the new home and the costs of moving,” he says.
Do your sums
Keep calm and don’t overprice
Sotheby's Realty - South Africa
The exuberance that was evident in the property market a year ago is coming to an end, and home sellers in most parts of SA now need to moderate their price expectations accordingly accoding to the advice of Lew Geffen, chairman of Sotheby’s International Realty in SA, who says that although summer is here and the prime home-buying season is picking up momentum, the heat has gone out of the market in the past few months and the rate of price growth is slowing down.
“Since 2012, when the market really began to turn after the 2008/ 09 recession, we have seen the average home sale price in our group rise by around 26%, and at this level we are seeing indications of buyer resistance in most of the country except Cape Town, where demand is still very high.”
Geffen says he is aware that his point of view may be at odds with what some other high-profile commentators may be saying about the state of the real estate market, “but the fact is that there has been a weakening of consumer sentiment this year in the face of violent strikes, major political shifts, rising inflation and, of course, a couple of interest rate increases.
Property owners building illegally
IolProperty - South Africa
It's probably every homeowner's dream project, particularly those with growing families: put in an extra bedroom, recreation room or even a whole new floor or wing.
But there's growing concern that, while South Africans are quick to use their savings or loans to improve or expand their homes, many are not complying with building regulations. About R39 billion was lost to municipal coffers each year because of illegal building work countrywide, mainly by homeowners who put up alterations without the required permits, the National Regulator for Compulsory Specifications, an entity of the Department of Trade and Industry, revealed in Durban recently.
'This is R39bn lost to the economy,' said the regulator's technical adviser for architecture and the national building regulations, Rudolf Opperman.