Property 24/10 - 118

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In recent months, there has been a lot of contradictory and confusing information about home prices emerging from banks and market commentators. Berry Everitt, managing director of the Chas Everitt International property group says there is a way to get a clearer picture

Writing in the Property Signposts newsletter, he notes that some commentators say prices are rising, some that they are falling and some that while prices are rising the rate of growth is declining – all of which is a bit bewildering for homebuyers and sellers.

However, all this really shows is what we already know, that is, that the market is always in flux and that home values in each sector and each area are shifting all the time in response to a whole variety of local factors, he says.

Everitt explains that this is why it is essential for home buyers and sellers to be able to look in as much detail as possible at the ‘small picture’ – or the current market value of the specific property they are interested in buying or selling – as well as the big picture of macro-economic trends and regional forecasts.
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Bank home loans and deposits
Banks are granting more 100% home loans but they have raised the deposit requirements for those buyers who do not qualify for 100% loans. This is according to the latest statistics from BetterBond, South Africa’s biggest mortgage originator, which represent 25 percent of all residential mortgage bonds being registered in the Deeds Office and includes applications to, and bond grants from, all the major lending banks in South Africa.

Rudi Botha, chief executive officer of BetterBond, says these figures show that the percentage of 100 percent home loans being granted rose to 41 percent in June, compared with 37 percent in May.

Botha say the average percentage of purchase price that non-100 percent borrowers were required to pay as a deposit in order to secure a home loan rose in the same month from 17.1 percent to 19.1 percent.

“This coincided with an across-the-board increase in the prices being paid by home buyers and supports our previous observations that there is a deposit ‘sliding scale’ – that is, the higher the home price, the higher the deposit percentage is likely to be.” 
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Joburg's supplementary valuation roll
The City of Johannesburg has extended the objection date for the ninth supplementary property valuation roll to the 25 July 2012.  This supplementary valuation roll has been targeted at a substantial number of Johannesburg properties that the municipality considers to have been undervalued in their general valuation roll, which was implemented on the 1 July 2008, as well as properties that were incorrectly categorised by the municipality ab initio.

Ben Espach, director of valuations at Rates Watch, says because of the long delay in compiling this supplementary roll there has been widespread criticism and public outcry regarding the legality and fairness of this roll.

Espach explains that in terms of section 78(1) (a–g) of the Municipal Property Rates Act (MPRA), a municipality must, wherever necessary, cause a supplementary valuation to be made in respect of any rateable property affected by any of the criteria contained in this section.

The clause that affects most of the property owners targeted in the ninth supplementary valuation roll is section 78(1)(e) which states that “any property that has been substantially incorrectly valued during the last general valuation roll can be revalued by way of a supplementary valuation”.
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What rental increase is acceptable?

A Property24 reader asks:
I would like to find out where to find the law that stipulates that there are no limits to a rent increase? Also, could you recommend what rental increases are acceptable and how to manage the process with a tenant? 

David Beattie, principal of Chorus Letting, a Cape Town based specialist residential letting company, advises: 

There is no law on this subject. It varies in accordance with inflation and what is deemed reasonable based upon a multitude of factors. 

What increases are happening at the moment depends on the time of year, prevailing market conditions, the area, the existing rent relating to the market value, etc. I believe a maximum of 10 percent is acceptable and that an amount that is fair in keeping with all these factors mentioned should be calculated, as opposed to a flat rate. 
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Tips on how to increase property value
Property is one of the largest investments one can make in life and maintaining that investment and increasing its resale value is essential.  Craig Hutchison, chief executive officer of Engel & Volkers Southern Africa, says doing this is important for when the owner decides to sell their home.

Hutchinson shares the following guidelines that could assist owners in increasing the value of their property, once they have decided on what their budget will allow:

Landscaping
A low maintenance garden could attract a buyer and can be just as appealing as a high maintenance garden.

Making use of plants and shrubs that are indigenous to the area will alleviate unnecessary watering and maintenance.

Ensure that the existing plants and trees in your garden are pruned regularly.  An automatic watering system and a water feature will add value to the garden.  Paving must look attractive and in the rainy season will be as asset.
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8 tips for first-time property buyers
Steadily growing house prices and the fact that banks are looking more favourably upon first-time buyers makes it a good time to get a foothold on the property ladder.  However, while conditions are improving, it's still important for first-time buyers to get all their ducks in a row before making an offer. 

According to ooba’s latest statistics, June was the 14^thconsecutive month of price growth for first-time property buyers, and the eighth consecutive month of growth in overall residential property prices. 

The average price paid by first-time buyers in June is up by 13% to R682 042 from the same month last year, and 52% of the home loan applications received by ooba in June were from first-time buyers. 

This shows that first-time buyers have a healthy appetite for property right now, says Kevin Mountjoy, ooba national sales manager. 

He says given that banks have eased their lending criteria, the current interest rate looks set to remain stable at these current low levels, and house prices are increasing, so this makes it a good time for prospective buyers to get into the property market. 

Mountjoy explains that banks are far more likely to grant a home loan at a favourable interest rate if the buyer is able to offer a deposit. He says that first-time home buyers need to be mindful of the following tips before starting the home buying process: 
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Know the law of renting out property
There are various laws which govern the way one does business, particularly when it comes to renting out premises.  Knowledge is always the essential ingredient when protecting yourself and your business, and knowing your rights and obligations is vital in ensuring a successful and stress free association, says Dianne Brock, general manager of the Institute of Estate Agents, Western Cape.