Property 24/10 - 18

Strong price growth for smaller houses
House prices in SA continued to grow year-on-year (y/y) in June, trumping the growth in May by a mere 0,1%, and affordability issues are positive drivers for pricing trends for smaller houses.

These are some of the findings in Absa's latest House Price Index, which showed that the average nominal value of small, medium and large houses for which Absa approved mortgage finance increased by a weighted 14,8% y/y in June versus 14,7% in May.

"Price growth in the South African housing market appears to be nearing an upper turning point," says Jacques du Toit, property economist at Absa.

The residential recovery is over
The residential property market recovery is now officially dead and not even the economic effects or convivial atmosphere of the Soccer World Cup will revive it.

So says FNB property economist John Loos, who adds that in spite of a moderate recovery phase from early-2009 to around mid-year, "here onward I expect to see transaction volumes decline and house price inflation start to taper off".

So what is the reasoning for the sombre view?

"A lack of interest rate stimulus since the end of last year's big cuts, and the positive impact of last year's cuts starting to wear thin. On top of this, recent month-on-month growth in the SARB Leading Indicator has been slowing.

What should I upgrade?
It is by now common knowledge that spending too much on your house's upgrades can lead to overcapitalisation, which will result in you not fully recouping the costs of your outlay when you sell.

But what are necessary upgrades and which ones can be classified as imprudent upgrades? Put differently, how much should you spend to increase the value of your home when you sell?

On the one hand, the reasons for this are general and apply to all properties, but they are also area-specific.

CT drafts new property policy
The City of Cape Town's Property Management Department has drafted an extensive new policy on the management of its immovable assets, which is now open for public comment until 31 July 2010.

"I would like to remind Capetonians to please familiarise themselves with the new draft policy and take the time to participate by submitting useful comments before it is finalised," said the City's Mayoral Committee Member for Economic Development and Tourism, Alderman Felicity Purchase.

The new policy seeks to provide a practical framework for the management of the City's immovable property. It is available in English, Xhosa and Afrikaans either online at or at the City's Sub-Council offices and public libraries.

Rulings bad news for non-paying tenants
Two recent High Court cases will make it a great deal more difficult to avoid the payments due on sectional title levies and rents.

So says Grant Gunston, senior director of Grant Gunston Attorneys, who adds that "recently, there have been instances where defaulting body corporate (BC) members and/or defaulting sectional title tenants have applied for debt counselling". "And the National Credit Act (NCA) stipulates that where this happens the defaulting payer is entitled to a temporary moratorium on his payments in order to give him time to sort out his affairs.

"These new High Court rulings have exempted the landlords and BCs from this ruling, taking us by and large back to the situation where non-payers are held to the contract they signed."

Agents must protect buyers and sellers
Estate agents have a moral and legal duty to protect the interests of property buyers as well as sellers.

"Sellers expect estate agents to protect their rights as a matter of course, but they should keep in mind that agents are honour-bound to also make sure that buyers' interests are served," says Martin Schultheiss, CEO of Harcourts Africa.

"Buyers have a right to make sure that their property investment will be protected, and the only way they can determine this is if they have access to pertinent information, such as the reasons why the property is being sold," he says.

Development application causes spat
Heritage agencies and developers have rarely had a warm relationship, but in Gordon's Bay, a local architectural firm says what it regards as unreasonable objections are costing them their profits.

Gordon's Bay's Marcus Smit architectural firm is incensed that the Gordon's Bay Village Action Group (GBVAG) intends to press on with an objection against an appeal for permission to deviate from zoning scheme regulations for renovations to a residential property, 53 Watt Street.

The proposed project would involve the addition of a new garage next to an existing one, a new first storey above the ground floor, and a relaxation of the front boundary line from 4,5 m to 0 m. The application was approved by both the municipality and sub-council but, due to the objection by GBVAG, must now go through provincial government.

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