All posts by admin

Mature homeowners can unlock property value

Mature South African Homeowners Can Unlock Property Value

It’s common cause that less than 5% of South Africans have sufficient retirement income but unlocking the value in their properties can go a long way towards a solution. “Financial planners place heavy emphasis on providing for the future of the younger generation, but little help is available for those who have already reached retirement age and are cash poor but asset rich in the form of their property,” points out Gerhard Kotzé, CEO of the ERA South Africa property group.

The good news is that there are numerous ways to tap into that value. Reverse mortgages, as they are known, are pioneering ‘equity-release’ products. Seniors Finance offers a product called SF Help, while Nedbank has launched its Home Income Plan.

Both basically assist senior citizens in unlocking value from their homes without having to sell them. “The principle of these products has been well tested overseas. Basically, the senior citizen homeowner is granted a loan based on the value of the property, rather than on his or her income level,” Kotzé explains.

In the case of the Nedbank product, for example, the borrower has to be at least 65 years of age, the minimum value of the property R850 000 and the minimum loan R200 000. The Nedbank loan is granted with the option of repaying or not repaying it. If the choice is the latter, the loan is repaid at the death of the borrower from the assets in the estate or by the surviving spouse, by which time the property should have increased in value.

“Good financial advice is needed before entering into one of these agreements, as with other options such as selling to your children. Parents can sell their homes to their children but need to beware of donations tax and transfer duty (payable by the buyers) and capital gains tax (payable by the sellers).

Published By: Property Trader, September 26, 2007

Leave a comment
Mortgage originators saving South African consumers R30bn annually

Mortgage Originators Saving South African Consumers R30bn Annually

The rise in popularity of mortgage originators in the home buying process has now reached a level where they are collectively saving South African consumers R30bn a year in interest charges through lower home financing costs.

This comes from discounts to the prime lending rate originators achieve by shopping around at various banks on behalf of homebuyers to secure the lowest borrowing rates possible says the company that launched bond origination in South Africa in 1999.

There is no charge to homebuyers for originators’ services. Rhys Dyer, chief operating officer of MortgageSA, the originator that has placed over 300 000 people in their homes with over R100bn in mortgages, says that prior to the advent of origination banks offered customers home loan rates of, on average, 0,5% below prime. “Since originators came on the scene, we have driven this average rate concession down to 1,5% below prime, saving consumers on average 1% on their rate concession. “

This 1% saving – based on annual new homeloan values – represents a R30 billion interest savings annually to consumers over the life of their bonds.” Dyer says that in the current cycle of rising interest rates, consumers need to be even more certain they are getting the lowest rate when sourcing a home loan because even a 0,1% lower rate will make a significant difference over the life of a bond. Dyer notes that as early experience of the NCA has shown there is variation in banks’ lending criteria. This means that people declined by one bank are often approved by another.

Authored By: Rodney Hayter, September 25, 2007

Leave a comment
Johannesburg’s new gold belt

Johannesburg’s New Gold Belt

Whether you love or hate the idea of the vastly expensive Gautrain that’s set to cut through the nation’s busiest region, don’t ignore it from a property perspective. Land and property along the Gautrain route is set to become South Africa’s “new gold”. That is the forecast from John Loos, property strategist, in the FNB Commercial Property Finance market update for the third quarter. He said he believes mounting congestion “will limit the pace of both urban sprawl and the de-centralisation of commercial activity, and promote densification of prime existing locations”.

Traffic will continue to slow even out of peak hours, making it “far more difficult” to move around for business purposes. The result, said Loos, is that people should move closer to the commercial action and places of employment as well as to good transport infrastructure. This should lead to “an increasing amount of office location decisions” made on the same basis.

“I am of the view that the land/space along the new Gautrain route will become SA’s new gold, and we are already seeing investors respond logically, with recent announcements of high density office and residential developments in the likes of Rosebank.” Loos said Johannesburg residents can expect more of the same to follow. Many old buildings as well as office parks have insufficient parking. Loos said it looks as if the “parking constraint will deteriorate further”. Owners of well-placed parking garages could achieve some of the highest commercial property returns in the coming years, he said.

“All ships on a rising tide’ is probably an appropriate phrase at the present time of low vacancy rates. But their performance may not keep up with the nodes along the Gautrain corridor over the longer term,” he said of areas “away from the main decentralised action”. This is because the Gautrain “will provide a valuable high-quality public transport service at a time when commuting (and intra-day business travel) is becoming increasingly time-consuming and problematic”.

Authored By: Moneyweb, September 10, 2007

Leave a comment
Developers to bend the knee to middle and low-income buyers

Property Developers to Bend the Knee to Middle and Low-income Buyers

Low to middle income home buyers often ignored by developers in the mid 2000s boom period in terms of their housing needs are about to be given a fair hearing. In fact it’s likely that developers, at least the wiser ones, will be falling over themselves to meet the lower market segments every need, according to a prominent home loan expert who believes property related stakeholders can no longer ride on higher house prices to balance the books.

“Volume, not value,” was cited repeatedly by Marsha Haupt, national sales manager of mortgage originator Better Bond, as she urged home loan consultants at a recent convention in Johannesburg to increase their market activities. As the average household debt of 73 percent nudges its highest levels ever and upward pressure continues on interest rates, Haupt says the lower house price growth will be driven by affordability levels. Haupt strongly advises developers to keep a weather eye on oil price trends, domestic fuel and food prices and the rand exchange rate in their forward planning. All of which, she believes, will be strongly inter-woven in the house purchasing trends into the next year. Even so, Haupt is cautiously optimistic of a house price growth of around 13,1 percent (7,2 percent real) for the year over that of 2006.

Assuming developers will respond to the burning issue of affordability, either through building smaller units, lower price finishes and higher densities she sees this having a positive effect in stabilising selling prices in the second hand market. Her view is based on the current price differential between new and existing houses, which in the first quarter of this year was only 2,3 percent, or R21 800 more than an average size house. Far off the cry of the 31,1 percent, or R173 100 differential between new and existing recorded in the first quarter of 2003.

Given that the banks are still lending up to 108 percent on the purchase price of a new unit and transfer costs are included in the selling price Haupt says existing homes, unless representing good market value for money, could find themselves sitting. The situation could be further exacerbated by increases in second hand stock, which are already in over supply.

Published By: Rodney Hayter, September 5, 2007

Leave a comment