Sunday 25 November 2012

Housing demand to rise 'dramatically'


11/26/2012 8:26:52 AM

The world-wide expectation is that a scarcity of capital will prevail in 2013, resulting in no increase in mortgage lending.

So says Neville McIntyre, chairman of Aida's parent company Jigsaw Holdings, says.

"The demand for housing, on the other hand, is set to increase dramatically, so we foresee a slight increase in the number of property transactions and in the number of new developments coming to the market. There will also, of course, be strong demand for rental properties, which will be good for buy-to-let investors and prompt an increase in investment purchases."

He says large numbers of "distressed" properties being brought to market by the banks and sold below market value will suppress home prices in 2013. These "bargain" properties will sustain activity and awareness and make home ownership more accessible for quite a number of people.

McIntyre also says that a lack of skills and capacity in government and planning departments, as well as in some deeds office branches remains of serious concern to the property industry. It causes major delays in developments, zoning approvals and transfers, and that has financial implications for everyone in the property sale chain.

Rudi Botha, chief executive of mortgage originator BetterBond, doesn't expect any rise in the prime interest rate until at least the end of 2013.

But many prospective homebuyers will remain unable to take advantage of low interest rates that make home ownership more affordable, so there is also unlikely to be any significant rise in home sales or prices next year, he says.

"The problem is that many households still have just too much debt to qualify for home loans, and the situation has being exacerbated this year by huge growth in unsecured lending, particularly by loan sharks who take advantage of consumers and charge exorbitant interest rates that just sink people deeper into debt."

He believes the banks, while retaining their strict credit criteria, will be focusing more on secured lending next year rather than personal loans and other forms of unsecured lending, and this will encourage consumers to pay down their debts and save the deposits they need to get home loans at advantageous interest rates.

And that should bring about an improvement in home loan grant rates and home purchases towards the end of 2013.

Botha says first-time purchases, which account for 40 percent of the total, will continue to be the main drivers of the market next year, as they free up existing owners or developers to make further purchases or start new projects.

"We do, however, expect buyers at all levels to respond to ever-rising food, fuel and utility costs, and higher property taxes, by continuing to 'buy down' to smaller and less expensive properties, and this will also constrain house price growth, especially in the upper sectors of the market."
Berry Everitt, managing director of the Chas Everitt International property group, says 2013 will be the year when property developers start making a moderate re-entry into the market.

"There has of course been some development at the lower end of the market for the past few years, because buyers in this sector are often subsidised or able to gain special access to 100 percent home loans. However, I expect developers will become increasingly active in the R650 000 to R850 000 price bracket where the banks are lending well, especially on newly-built homes."

He believes banks will continue, for most of next year, to keep a lid on the market by valuing properties and lending according to bank security value, which doesn't necessarily coincide with market value.

"In other words, they will often not be prepared to lend as much as the prospective buyer is willing to pay, leaving serious sellers little choice but to lower their prices if they want to conclude sales."

An alternative response is for buyers to increase their deposits, but this seldom happens, and it is more likely that buyers will abandon deals if sellers won't budge, and look for cheaper properties.

"So either way, this practice is likely to prevent the rising housing demand that we see occurring next year from being translated into rising property prices, as it usually would be. In fact, we don't expect nominal house price growth to top inflation next year."

He says major brands will add to their franchise offerings new systems and processes for managing long-term and holiday rental properties, to "recession proof" their franchisees.
Lew Geffen, chairman of Sotheby's International Realty in SA, says he expects a much more buoyant residential property market in 2013.

"The recession is over, not only economically but also psychologically, and consumers are now much more confident about moving on with their lives and advancing their home ownership plans. Housing demand is increasing at all levels, and although bank caution is slowing sales in the under R1.5m category, this is much less of a problem in the higher price sectors, where buyers generally require finance for a smaller percentage of the purchase price."

Sotheby's has experienced a sales surge in the R6m to R10m range, driven mainly by South African buyers taking the opportunity to upgrade to larger and more luxurious properties at the current favourable prices - in the belief that these won't hold for more than another year.

Geffen expects overall price growth in 2013 to be constrained at around the level of inflation until more stock is absorbed, but is confident prices will start to climb strongly in 2014, which he believes will be the start of a new boom.

Jan Davel, managing director of the RealNet estate agency group, says household finances are likely to remain under severe pressure in 2013, which will limit the ability of prospective buyers to qualify for bonds and become home owners.

"On the one hand, the increased consumer demand for credit in 2012 has been matched by aggressive lending for personal loans, and many households will be carrying increased debt loads into 2013.

"Then on the other hand, real disposable incomes are likely to shrink due to such factors as Eskom tariff hikes, rising food and fuel prices, higher municipal rates and the introduction of e-tolling in Gauteng. So debt ratios that have been declining will, in many cases, go back up again and choke off demand. Many households will simply not be able to qualify for home loans, despite the fact that interest rates are expected to stay low in 2013.

"And those same low interest rates will make it difficult even for those without much debt to grow their savings and pay the substantial deposits that banks so often require now to grant loans."

Meanwhile, says Davel, there is an abundance of distressed properties being sold by the banks at much-reduced prices - about 80 percent of current market value, on average - and this will have an additional negative effect on house price growth.

"Consequently, we expect relatively low nominal house price growth during 2013, and negative real house price growth, similar to that in 2012."

He says the property industry will be going through a "detox" next year, as current estate agents have until the end of 2013 to bring their minimum qualifications up to date, and Continuous Professional Development has also been brought into play.

"These barriers to entry, together with legislation like the Consumer Protection Act, rising consumerism, ever improving technology and a much more efficient Estate Agency Affairs Board will all have an extremely positive influence on the industry, since agents who don't pay attention to the new training requirements, skills intensities, rules, procedures and market conditions will be unable to keep up with those who have geared up for a more professional arena. The industry will say goodbye to many of the ' not- so- good' operators," says Davel.

(Weekend Argus - Sunday Edition)

Aida National franchises predictions for 2013


11/16/2012 1:45:30 PM

Neville McIntyre, chairman of Aida’s parent company Jigsaw Holdings, says the expectation all over the world, and not just in SA, is that a scarcity of capital will prevail in 2013 and that there will thus be no increase in mortgage lending.

“The demand for housing, on the other hand, is set to increase dramatically, and because of that we foresee that there will be a slight increase in the number of property transactions and in the number of new developments coming to the market.

“There will also, of course, be strong demand for rental properties, which will be good for buy-to-let investors and prompt an increase in investment purchases.”

He says large numbers of “distressed” properties still being brought to market by the banks and sold at below market value will suppress home prices in 2013 – “but at the same time these ‘bargain’ properties will sustain activity and awareness and make homeownership more accessible for quite a number of people”.

McIntyre also notes that a lack of skills and capacity in government and planning departments and well as in some Deeds Office branches remains of serious concern to the real estate industry.

“It causes major delays in developments, zoning approvals and transfers, and that has financial implications for everyone in the property sale chain.”

GERMISTON HOMES FIND FAVOUR


GERMISTON HOMES FIND FAVOUR

Demand for homes in Germiston has escalated rapidly in the past three months and stock is being taken up fast with homes that were regarded as overpriced a few months ago now finding ready buyers.
Madelein Muller, manager at the local Aida estate office, reports that the market was subdued until the end of winter with plenty of stock available. "But after the July cut in interest rates, excess stock was taken up quickly, even at asking prices that a few short months ago were regarded by buyers as too high.
"And at the current levels of demand, we expect that prices may actually start to rise in a month or two as stock becomes scarcer," she says.
Entry-level homes are in particular demand and units priced from R650 000 to R750 000 are selling fast in areas such as the city centre, Primrose and Birdview. Buyers are mainly upwardly mobile consumers from surrounding areas such as Katlehong, Vosloorus, Jeppestown and Malvern, who see good value in units with three bedrooms, two bathrooms and a garage in this price range.
Homes in the mid-market range are currently also selling well at around R850 000. Properties at this price typically offer up to four bedrooms, two bathrooms, family rooms and a pool and are popular among buyers with families.
Larger homes in areas such as Dawn View, Fisher’s Hill and Primrose Hill have also overcome price resistance among the new buyers streaming to Germiston. Priced at R900 000 to R1,1m, homes in these areas often feature good views, and many have separate cottages, granny flats or staff quarters. Most homes have tile roofs, creating an attractive profile on the hillsides.
"Compared to median prices for this class of property elsewhere, Germiston offers excellent value - a fact not missed by new middle-class buyers looking to settle their families in spacious homes in established suburbs," says Muller.
Article By: www.aida.co.za

Sunday 18 November 2012

AIDA NATIONAL FRANCHISES PREDICTIONS FOR 2013


November 2012

Neville McIntyre, chairman of Aida’s parent company Jigsaw Holdings, says the expectation all over the world, and not just in SA, is that a scarcity of capital will prevail in 2013 and that there will thus be no increase in mortgage lending.

“The demand for housing, on the other hand, is set to increase dramatically, and because of that we foresee that there will be a slight increase in the number of property transactions and in the number of new developments coming to the market.

“There will also, of course, be strong demand for rental properties, which will be good for buy-to-let investors and prompt an increase in investment purchases.”

He says large numbers of “distressed” properties still being brought to market by the banks and sold at below market value will suppress home prices in 2013 – “but at the same time these ‘bargain’ properties will sustain activity and awareness and make homeownership more accessible for quite a number of people”.

McIntyre also notes that a lack of skills and capacity in government and planning departments and well as in some Deeds Office branches remains of serious concern to the real estate industry.

“It causes major delays in developments, zoning approvals and transfers, and that has financial implications for everyone in the property sale chain.”

ISSUED BY AIDA NATIONAL FRANCHISES 
FOR MORE INFORMATION VISIT www.aida.co.za