Weekly Newsletter
Friday, 7 August, 2009
Property Search | Estate Agents | List your property

Edition 31 of 2009, Friday, 7 August 2009

Dear Reader

South Africa is thought to be about 15 000 official beds short for the 2010 Soccer World Cup - Fifa's official accommodation supplier. Would it not have been nice to read "South Africa is thought to be about 15 000 houses short for sale for the 2010 Soccer World Cup" sure that would have warned up the hearts of many property owners.

What happened in the property industry this week?

UK - House prices have risen three times in seven months, the Halifax says. Halifax today halved its forecast for how far house prices will fall this year after reporting a further rise in July as increased demand combined with a shortage of availability continued to support the market.

The lender said it had been surprised by recent price rises, including a 1.1% jump in July which took the average price of a UK home to £159,623 and means that so far this year prices are down by just 0.8%. As such it revised down its forecast for price falls from 15% to 7%.

USA - In the last week, a slew of economic reports and news articles have suggested that the U.S. housing market has bottomed out. Don't believe it. More pricey areas, often in large metro areas, still have plenty of room to fall. The reason to expect further declines in some areas is that the U.S. housing market has now bifurcated. It's true that some areas with lofty rises (and subsequent severe falls) may have stabilized.

South Africa - House price deflation may be bottoming out, according to Absa's House Price Index. "With South African house prices deflating since late 2008, this trend seems to be near the lower turning point on a year-on-year basis, while month-on-month price deflation has slowed down further in July after bottoming in March this year," said Absa analyst Jacques du Toit.

The First National Bank (FNB) house price index and the Standard Bank residential property report released this week both showed that house prices continued to decline, but with the latter hinting that the rate of decline may be starting to slow. The FNB index showed a continued decline last month of 9,5%, slightly better than the revised 9,7% in June. However, FNB property strategist John Loos warned that the slowdown did not mean a sustainable national price increase just yet. For the time being this means a possible slowing in the rate of price decline. This comes after a period of continuously declining price inflation, and more recently accelerating price decline, which spans back to the beginning of last year, Loos said.

Big news is that inflation and credit growth both slowed more sharply than expected for the month of July 09. This should spur a lively debate at the Reserve Bank's next monetary policy meeting, even if it decides to keep interest rates steady.

In the current property market, what may appear as an opportunity could be a costly exercise, if you don't know the rules of the game. The price gain on purchasing properties which have been foreclosed on by the banks may come at an undisclosed cost. Before venturing into this lucrative market segment properties in possession and sale in execution be aware of its restrictions and shortcomings. This stock in the creditors hands is known as 'properties in possession' (PIP). PIP: promise and pitfalls

Enjoy!
The editor


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>>Real Estate news CENTRAL LONDON RESIDENTIAL MARKET OFFERS GOOD BUYS

Shrewd international property investors, says Lanice Steward, have traditionally always held stock in London, particularly central London, because it has tended to be one of the top three or four top property performers in the world along with Monaco, Brussels and New York.

Right now, said Steward, Anne Porter Properties London affiliate, Knight Frank, has reported that conditions are right for 'well advised' investors to build up their portfolios.

The message coming from Liam Bailey, Knight Frank's Head of Residential Research, is that weak sales performances have increased the stock available for renting.  This, in turn, has lowered the rental returns, which for the first time in many years are now below 4%.

>>Real estate that sold for 171m four years ago is now a car park

A builder who paid a record amount for a site in Dublin has been forced to turn it into a car park in a bid to raise money.

Developer Ray Grehan has been left with no other option after he abandoned plans to develop the old UCD veterinary college site due to the property slump.

The owner of Glenkerrin Homes shelled out an unprecedented €171.5m (£146m) four years ago for the sought-after south Dublin site. But this week the horsey-set will park their trucks there while they attend the Dublin Horse Show at the nearby RDS.

Show organisers revealed that they were looking for extra parking capacity after prices in the area increased substantially. And Mr Grehan has confirmed that the former veterinary college will now be used as a car park for the five-day show, which begins on Wednesday. The site on Shelbourne Road earned the property developer a mention in the history books when he splashed the cash, with the deal equating to around €84m (£71m) an acre for the site, which is just over two acres. In June planners granted permission for Mr Grehan to develop the site.

However, due to the slump in property prices, Mr Grehan said he would not be developing it in the current climate. He hopes the market will have turned around within two years, and that the site will once again be a prime development. In the meantime, it will serve as a car park.

“Due to a substantial increase in the cost of parking at the Old Belvedere Rugby & Football Club in 2009, the RDS will provide two alternative parking options for the show,” the Dublin Horse Show website says. “Parking will be available at the old veterinary college site in Ballsbridge for trucks.”

>>Almost, but not quite

House price deflation may be bottoming out, according to Absa's House Price Index released on Thursday.

"With South African house prices deflating since late 2008, this trend seems to be near the lower turning point on a year-on-year basis, while month-on-month price deflation has slowed down further in July after bottoming in March this year," said Absa analyst Jacques du Toit.

In the middle segment of the market, house prices were down by 4.2 percent year-on-year to R925 100 in July 2009, following a decline of 4.1 percent year-on-year in June.

On a month-on-month basis, house prices were 0.2 percent lower in July compared with a decline of 0.4 percent recorded in June.

>> Slowdown in property market to taper off

THE First National Bank (FNB) house price index and the Standerd Bank residential property report released yesterday both showed that house prices continued to decline, but with the latter hinting that the rate of decline may be starting to slow.

The FNB index showed a continued decline last month of 9,5%, slightly better than the revised 9,7% in June. However, FNB property strategist John Loos warned yesterday that the slowdown did not mean a sustainable national price increase just yet.

“ For the time being this means a possible slowing in the rate of price decline. This comes after a period of continuously declining price inflation, and more recently accelerating price decline, which spans back to the beginning of last year,” Loos said.

He said a turning point in house price deflation at about midyear had been expected, and it was possible that the slightly lesser rate of year-on- year decline in the FNB house price index may be an indication of the start of some “levelling out”.

>>Some customers more equal than others

Some home loan clients back in favour - Absa Realestateweb.co.za reporterI; it's getting a little easier to borrow money - banks' latest.

About one in two South Africans are unable to service their debts and at least one in five public servants have a garnishee order to his or her name - yet some banks are slowly re-opening the credit gates. But it's selective: Absa has revealed this week that it is being more generous to certain customers, while FNB is focusing on those who will help it shed distressed home loan clients from its books.

Banks have been criticised in recent months for stringent credit criteria that have put a lid on property sales and generally contributed to the tougher economic conditions for consumers and consumer-related businesses in general. 

The higher loan-to-value ratios and other criteria have worked against repeated interest rate cuts since December. Instead of asset prices and volumes rising as interest rates have dropped, market conditions have continued to deteriorate.

Banks have been turning down loan applications in their droves after being stung by easy credit handed out before the implementation of the National Credit Act and the global financial crisis. However, there are signs that banks are easing up a little and some are acknowledging that customers should be treated more selectively and qualify as good debtors.

>>Luxury house sales point to upturn

03 Aug 2009 - I-Net Bridge - Intro House prices are expected to decline by 10% this year, but the luxury end of the market is showing strong signs that the residential market is at a turning point.

By Don Robertson

House prices are expected to decline by 10% this year, but the luxury end of the market is showing strong signs that the residential market is at a turning point.

Sales of luxury houses by the Johannesburg offices of Sotheby’s International Realty SA have risen by 21%, to 726 units in the first half of this year compared with the same period last year.

The average price rose to R7.5-million from R5-million, said chairman Lew Geffen.

The sales trend in Johannesburg is similar to those in other major cities, he added.

“Much of the additional activity has taken place in the past couple of months, which has seen the sale of a property in Bryanston for R50-million and another in Sandhurst for R35-million.

"We have also seen a 45% increase in the total value of luxury properties sold over the past six months.”

>> Pitfalls lie in wait for property sellers and buyers who are ignorant of property law, says APKF managing director

Despite regular warnings on this subject from most of the major estate agencies, property buyers and sellers, says Lanice Steward, MD of Anne Porter Knight Frank, still regularly ignore some of the basic rules of property transactions.  This can on occasion lead to severe difficulties and expensive legal proceedings.

It has to be emphasised time and again that a signed contract is totally binding.  For reasons that I have never really understood, some signatories, including affluent people in leading positions in industry, seem to believe that if they change their minds down the line a friendly discussion and perhaps a small compensatory payment will result in the sale agreement being cancelled. 

Regrettably, although this has been known to happen, most bargainers, particularly in the current market, are hard nosed and will simply insist on the agreement being observed.

>>More tenants pay on time

The latest TPN Credit Bureau rental payment monitor shows that rentals paid on time in the second quarter improved by four percent.

"It is still too early to be certain, but declining interest rates putting more cash in the hands of tenants may have improved cash flow in terms of meeting non-credit expenses such as rent," said TPN on Thursday.

The data shows that rentals paid on time and in full improved four percent to 61 percent. Overall non-payment improved by five percent, down from 19 percent to 14 percent.

Sapa

>>Scoring property bargains when the bank steps in

*Buying from desperate sellers: Avoid these traps

Now is the time to scoop a bargain as banks are calling for sales in execution where property owners are in arrears with home loan installments.  But be sure to find out exactly what you are buying and what you need to pay for.

To avoid overpaying for the property you should do your homework and determine its market value, also familiarise yourself with its location , the conditions of sale and the title deeds to the property.

Where the Sheriff of the High Court has been instructed to sell the property you should approach him in good time before you attend the sale in execution and ask to see the sale contract and for the terms and conditions of sale to be explained to you - or consult your attorney for advice.

The conditions of sale, which are signed by the Sheriff and the buyer, set out the costs that have to be paid over and above the bid amount, for example Sheriff's commission which is based on the purchase price, auctioneer's commission (which is normally for the seller's account in a private auction), arrear rates and taxes, electricity and water charges, levies and legal costs, electrical compliance certificate, entomologist certificate, costs of transfer and any other charges necessary to effect transfer on request by the conveyancers.

>>PIP: promise and pitfalls

In the current property market, what may appear as an opportunity could be a costly exercise, if you don’t know the rules of the game. The price gain on purchasing properties which have been foreclosed on by the banks may come at an undisclosed cost. Before venturing into this lucrative market segment — properties in possession and sale in execution — be aware of its restrictions and shortcomings.

Properties sold on auction on instruction by a creditor are termed 'sales in execution'. The auction will attract many bidders, including someone representing the creditor, who often bids for the property for and on behalf of the creditor, up to the loan amount outstanding. Where the creditor wins the bid, the property is repossessed. This stock in the creditors’ hands is known as 'properties in possession' (PIP).

>>Chas Everitt Home MakeOver - A Home Makeover with a Difference!

>>In cape winters, it is essential to seal buildings against moisture penetration

The recent heavy winter rains at the Cape have, once again, made many property and homeowners aware that their premises are anything but 100% waterproof, says Mike Grose, CEO of the Cape headquartered Technical Finishes group, which supplies the building industry with a wide range of specialist products.

Every year, says Grose, many property owners about this time realise that they have serious moisture penetration and rising damp problems and these can be damaging to a property if they are not dealt with.

One of Technical Finishes core products, a resin and cement based treatment known as Hyseal 210, has over a period of 12 years, said Grose, proved highly effective in sealing walls, ceilings and floors against moisture exudation

The cement component is supplied in a 25kg bag to which three litres of resin is added.  When mixed it is brushed on up to 500 microns thick and it will then set within four hours.

Hyseal 210, says Grose, is 100% effective and will adhere to any brick or concrete surface if these are thoroughly cleaned.  If it is applied to a painted surface, this must be scraped to ensure that it has no flaky or loose patches.

>>Essential for sectional title schemes

Essential for sectional title schemes to follow the prescribed management rules any attempt to ignore these is in fact a breach of the law, says IHFM gm

Many of the arguments and contentious issues encountered on sectional title schemes relate to the cost and/or the need for maintenance and improvements, says Michael Bauer, General Manager of IHFM, a professional sectional title management company which manages over 800 sectional title units.

Body corporate members, said Bauer, will find that, although there is no clear definition in the Sectional Title Act as to what are luxurious improvements and what are non-luxurious improvements but the Sectional Title Act stipulates that different procedures have to be followed before trustees can go ahead with either category of improvements on a legally sound basis.

The Prescribed Management Rules 33 (1) for luxurious improvements lay down that a unanimous decision from the body corporate members has to be obtained.  This can be achieved by getting written consent from all body corporate members (owners) or by calling a special general meeting.  If the latter course is followed, 30 day notice has to be given to all body corporate members.

When such a meeting does take place, the Act stipulates that a quorum of at least 80% of the members must be present in person or by a proxy and, again, all body corporate members present in person or by proxy have to vote in favour to obtain the required unanimous resolution for  the improvements proposed.

>>Beware this legal loophole

Or buyer could get away later - court judgment

It's not always enough to sign an offer to purchase for a property. Communicating acceptance is a must, cautions Ian Slot, a former practising attorney who is Seeff Properties' Southern Region Director. He offers these tips to help you ensure you avoid a property deal falling through later, thanks to a recently highlighted legal loophole.

In South Africa, for there to be a binding contract you need an offer and an acceptance of that offer, but must the person accepting the offer advise the other party that he is doing so before there is a contract, or is it good enough if he just signs the agreement?

Watch the wording of your contract carefully, Says Ian Slot, Southern Region Director for Seeff Properties.  Clauses may look similar but sometimes a different word here or there can have serious consequences."

This was highlighted in the recent case of Withok Small Farms (Pty) Ltd and Others v Amber Sunrise Properties 5 (Pty) Ltd 2009 (2) SA 50 (SCA) where the court had to decide whether it was sufficient for the seller to sign acceptance of an offer, within a specified time, for a binding agreement of sale to come into effect or whether he actually had to still communicate his acceptance to the Purchaser, for there to be a binding sale agreement.

>>News from Chas Everitt Property Group

Take a walk on the green side

If you want to tread lightly on the planet, a good place to start is by walking on eco-friendly flooring in your home.

And the flooring material that is currently rated as THE green alternative to carpeting, tiles or timber is bamboo, not only because it is a sustainable resource, but also because it is really attractive.

Bamboo is actually a grass that grows at an immensely rapid rate and reaches maturity in four to six years, unlike hardwood trees that take decades. What is more, cutting the stalks of bamboo actually promotes further growth in the plant, which means that it is not destroyed during harvesting as trees are.

Bamboo is also extremely versatile, with stalks, strips and fibres now being put to good use in all sorts of applications besides flooring, including furniture, countertops, blinds, window shutters and even organic clothing.

And it is important to note that the species of plant that is used to create such products is not the species eaten by panda bears, so you don't have to worry about them being further endangered if you install a bamboo floor.

However, there are some other things you should check on first. You need to check with your supplier, for example, that no rainforest has been harmed in the harvesting of the bamboo to be used in your home.

You should also ensure that any laminates, sealants and glues that will be used to install your floor are manufactured from environmentally friendly substances - and that they will not give off volatile organic compounds (VOCs) that could affect the air quality in your home and possibly even damage your health.


>> To the editor


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>> In the area...

The areas we are going to take a closer look at this week are;

  • East Rand
  • Wild Coast
>> In the area 1 – East Rand

East Rand the best kept property secret

The East Rand property market is poised for take off, with awareness growing of the appeal of Gautengs most user-friendly area.

So says Harry Nicolaides of CENTURY21 Deal Design, one of the winners of the recent CENTURY21 franchise award programme, who adds that market activity in the area is steady at the moment, as are prices within a 20km radius of the OR Tambo International airport.

The East Rand, inclusive of Benoni, Boksburg, Brakpan and Kempton Park has thrown off its old image of a mining and industrial area. There's definitely activity, our show house days are well attended and business is being done.

Industry is in fact still very much part of the make-up of the East Rand in the form of Isando and Dunswart. However it now also has a well-balanced residential and commercial economy, offering an enormous variety of properties from entry-level homes to upmarket luxury mansions.

>>In the area 2 Wild Coast

By Barbara Hollands
While the South African property market is in the throes of a major decline in values, the Eastern Cape‘s pristine Wild Coast is experiencing an unprecedented property boom.

Demand outweighs supply when it comes to real estate in the region and investors are queuing up to lay their hands on prime riverfront and seaside homes.

With Pam Golding CEO Andrew Golding having labelled the area stretching from Kei Mouth to Port Edward as the “next big thing”, some properties are taking just two weeks to sell.

Port St Johns estate agent Peter Woodford said the area had not been adversely affected by current property trends which have seen the value of houses plummet all over South Africa.

He had a long list of clients wanting to buy along Long Beach, a prime seaside strip in Port St Johns.

“There are only 20 homes along that stretch of beach, so if one comes on the market, we have a list of people we could sell it to. Prime sites get sold very quickly mainly to buyers in Johannesburg, KwaZulu Natal and Bloemfontein.”

Johannesburg resident Patrick Fegen waited “a very, very long time” for the perfect Port St Johns property and snapped it up instantly when it came up.

“The house is on Agate Terrace, which is highly sought after, so when it came up I wasn‘t going to let it pass.

>> Focus on Graaff Reinet, Eastern Cape, South Africa



Cradled in a crook of the Sundays River, to the approaching traveller, Graaff -Reinet seems like a verdant oasis in the stark surrounding landscape.

Graaff-Reinet is home to more National Monuments than any other town or city in South Africa. Round every corner a piece of our history is revealed to intersted visitors.

A short stroll down Cradock Street will reveal more than 50 of these historic homes. Take a walk down Parsonage Street in the centre of town - on the western end is the seat of the former Dutch authority of the Cape (Drostdy Hotel), while facing it at the estern end lies the erstwhile ecclesiastical power.

>> View Properties in Graaff Reinet/Eastern Cape
>> View Properties in Eastern Cape

>> Property of the week

Graaff Reinet/Eastern Cape

Bedrooms: 24
Bathrooms: 24
Garages: 1

Beautiful historical guesthouse for sale in the heart of Graaff Reinet

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>>Criminal fugitives 'live the high life in SA'

South Africa has become "a safe haven" for notorious international fugitives because it is relatively isolated and there is the perception that the justice system can be easily manipulated.

This has raised questions about whether the country's immigration and extradition laws need to be stiffened, according to legal experts.

Last week, the Saturday Star reported that Italian fugitive Vito Palazzolo was to be shipped back to his home country after losing his appeal against a 2006 conviction for "Mafia association", in which he was sentenced to nine years' imprisonment.

Another high-profile case was that of German fraudster Jurgen Harksen, who conned millions out of wealthy Capetonians. He and Palazzolo were among several fugitives who lived the high life in Cape Town.

Palazzolo, had a home in Fresnaye and is well known in wine circles in Franschhoek, where he owns a wine farm. He also uses the name Robert von Palace-Kolbatschenko.

Harksen had luxury homes, a yacht and several expensive vehicles.

Both men had strong links to high-powered politicians.

Interpol head office said hunting down fugitives fell within one of its six priority areas. The apprehension of wanted people was one of the most important fields of activity of global law enforcement.

According to its website, "Fugitives pose a serious threat to public safety worldwide. They are mobile and opportunistic; they frequently finance their continued flight from the law through further criminal activities, which may result in criminal charges in more than one country."

Charles Goredema of the Institute for Security Studies' Organised Crime and Money Laundering Programme warned in a report that a 2006 study by Greg Salter found that "South Africa is regarded favourably by many international criminals as reassuringly distant from the rest of the world, and in particular other countries' law enforcement agencies, and thus as a place they might hide out safely".

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  • Keep track of your On Show and On Special properties and list them on your website
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