Vacancy Survey Q3 2016
Tenant Profile Network - South Africa
Ask anyone in South Africa about housing and you will hear “there is a property shortage” which, it must be music to the ears of property investors. The key however is to identify the location and demographics of the ideal rental portfolio. Capital yield aside, property investors are chasing good income yields; in reality this is only achievable with a quality tenant and low vacancies – “no rent means no yield”.
TPN’s estate agent and landlord survey calculates the total number of vacant properties expressed as a percentage of the total number of rental properties. A vacant property is defined as a property which is unoccupied, and on the market for immediate occupation – in other words not held back for maintenance or other reasons.
The vacancy data is categorised by Rental Value: Low Iincome, Affordable Income, Mid Income and Mid-to-High Income.
Currently the national vacancy rate is 5.07%, with properties in the affordable segment - R3,000 to R7,000 fairing best with only 4.31% vacancies and properties in the mid-to-high income - R12,000 to R25,000 rent per month category nearly 3 times higher at 11.98% vacancies.
Tenant Profile Network
New developments set to outperform pre-owned homes in 2017
Rawson - South Africa
According to Absa, newly-built homes currently cost 31,2% more, on average, than their pre-owned equivalents – and that means, says Rawson Property Group Managing Director Tony Clark, that second-hand homes should be selling a lot faster than new ones right around the country.
“The traditional pattern when new home prices get this far ahead of pre-owned prices has been for buyers to focus heavily on the second-hand sector, causing stock shortages to develop in this sector and prices to rise relatively rapidly. At the same time, lower demand should cause the prices of newly-built homes to rise more slowly, and the market will tend to even out,” he says.
“Currently, however, the market appears to be deviating quite radically from that customary cycle, with new homes selling as fast and sometimes faster than pre-owned homes in many areas and their prices are actually rising much faster than those of second-hand homes. We think this is because of the increasing importance (in relation to price) of other factors influencing home choice - including security, location, lifestyle and increasing operating costs.”
The good, the bad and the budget
Steeple - South Africa
All eyes were on Finance Minister Pravin Gordhan yesterday evening as he delivered his budget speech. The predictions prior to the budget announcement were vastly varied and even more so the analysis on the budget by economists afterwards.
There were many contentious points that related to the economy from a national perspective, but what are the effects of the Minister's budget on the property market?
Raising the transfer duty threshold from R750 000 to R900 000 is a welcome concession for buyers in that price range. For example, a buyer who purchases a property for R900 000 after February 2017 will save R4500 in transfer duty.
The good the bad
Residential building statistics
Absa - South Africa
Subdued levels of residential building activity since 2009 continued in 2016 Levels of building activity in the South African market for new housing remained largely subdued in 2016, which were in line with trends since 2009 when the economy experienced recessionary conditions. The planning phase of new housing, as reflected by the number of building plans approved by local government institutions, showed some contraction last year compared with 2015. The construction phase of new housing, i.e. the volume of housing units reported as completed, recorded growth of much in line with that of 2015. These trends are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing (see explanatory notes).
The number of new housing units for which building plans were approved, was down by 6,4%, or 3 836 units, to 56 143 units in the twelve months up to December last year compared with a year ago. This came to only 54,7% of a total of 102 691 plans approved ten years ago in 2007. The drop in building plans approved in 2016 was largely the result of a combined decline of 16,5%, or 6 550 units, to a total of 33 214 units in the two segments of new houses. However, the number of plans approved for new flats and townhouses increased by 13,4%, or 2 714 units, in the 12-month period.
Building stats Dec 2016