Selling? How every week on the market loses you money
HomeTimes - South Africa
South African homes sell within 11 weeks of listing, according to FNB statistics, and 87% of sellers are forced to drop their asking price by 9% on average.
This means, on a bank-financed R1m home, at current interest rates (with no deposit and over 20 years), sellers will pay R9,984 per month, according to Standard Bank’s online home loan calculator. If their home takes 11 weeks to sell, they will pay more than R27,000 in bond repayment costs during this period.
Considering the fact that national home prices have risen by around 8% in the year to end-June, according to BetterLife HomeLoans (and only 2% after inflation), and buyers on average sell within eight years after purchase, the R1m home would be worth around R1,63m. If almost 90% of sellers are forced to drop their asking price by 9% on average, that means sellers end up losing R146,700 on the asking price of R1,63m (R1,48m).
What's better: To buy or to lease your commercial property?
Rawson - South Africa
Pros to buying your commercial property
Pre-supposing you are buying by means of a bond and not paying cash for this large investment, your monthly bond repayments will only alter if there is a change to the prime lending rate. By contrast, if you are renting space in someone else’s commercial property, your business will be subject to the annual rental increases, or an adjustment to current market related rentals when the lease needs to be renewed. “Also, after the bond has been paid off, your business will have acquired a major asset,” says Breytenbach, “and you will now have a great asset which has the potential to be sold at a profit.”
Another benefit is that you will also have the stability of a physical location which is important if customers come to your place of business. This security will preclude the hassle of moving, including the cost, the upheaval and the expense of having to amend your stationery, advertising and so on. Moving a business can be a major headache and is to be avoided unless absolutely necessary.
ooba expects zero property price growth
ooba - South Africa
Second quarter 2016 statistics released by ooba show nominal house price growth of 2 percent year-on-year compared to the second quarter of 2015. The Average First-time Buyers' Purchase Price fared slightly better, increasing by 2.8 percent year-on-year.
Rhys Dyer, CEO of ooba, says: "The sharpness of the decline in property growth in Q2 of 2016 is emphasised if one looks back to ooba's statistics for the first quarter of 2016 when the year-on-year growth of the Average Purchase Price was up by 6.2 percent from the first quarter of 2015.
"Slowing economic growth, increasing unemployment, escalating inflationary pressure and higher interest rates continue to erode consumer affordability. Consumer confidence is at its lowest level in years. With property price growth below Consumer Price inflation, we expect zero to negative property price growth in real terms for a while to come," adds Dyer.
Residential building statistics
Absa - South Africa
Residential building activity remaining under pressure
Based on data published by Statistics South Africa, building activity in the South African market for new private sector-financed housing (see explanatory notes) remained under pressure in the first five months of 2016, with much subdued year-on-year growth in activity levels in May this year. The planning phase contracted in the five months up to May, whereas the construction phase showed some relatively low single-digit growth over this period.
The number of new housing units for which building plans were approved was down by 3,5% year-on-year (y/y) to almost 23 000 units in January to May this year. This came on the back of a contraction in the planning phase across all three segments of housing. In May, only marginal growth of 1,3% y/y was evident in the number of plans approved.
Growth in the volume of new housing units reported as being completed came to 5,1% y/y in January to May, with a cumulative total of 16 357 units built during this period. The construction phase showed some noticeable divergent trends at a segment level, with strong growth of almost 32% y/y in respect of flats and townhouses in the 5-month period up to May, whereas the segment for smaller-sized houses contracted by 10% y/y over the same period and the segment for houses larger than 80m² showing growth of only 3,4% y/y in the 5-month period.
Building stats May 2016
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