Article By Private Property Reporter 23 Feb 2011
Real estate is one of the most exciting and dynamic businesses to be involved in, and historically this is the best place to invest some of your hard earned cash. Many investors buy properties and bank them, and then sell the properties off once they have either served their purpose or have gained value.
At times the investor sells off a portion of the portfolio or a whole portfolio, but timing is the key factor. Most successful property owners, once having built a substantial portfolio prefer to hang on to their assets, and are loath to selling, as the buildings and properties bring in rental income.
If you want to start your own property portfolio, it would be advisable to bank your properties for a couple of years, and then sell them at a profit. A five to seven year period is often a good time.
Real estate is often perceived to be a cutthroat business and not for the faint of heart, but the adrenalin rush when a major deal comes together can beat no other! Properties to buy / properties for sale are always in big demand, and those that are good value for money – well there simply are not enough of them.
Many real estate developers and investors buy run down shopping centres, commercial buildings and warehousing for the sole purpose of fixing them up and selling them off at a profit. These are some of the most sought-after real estate investments. Although many prefer to hold onto them.
Residential property is also big business if you are looking to start your own property portfolio. There are many areas where you can buy houses in a poor condition at an excellent price, renovate and repair them and then rent them out to tenants. This is lucrative, but can sometimes prove to be tricky if you are unfortunate to get poor tenants, but on the other hand, if the tenants are reliable and good payers, this can be a wonderful way to earn extra income.
Start your own property portfolio bit by bit, and glean information from the experts who have walked the path before you. A good starting point is to put an excellent business plan together well before you decide to embark on this project, as you would do with any other business.
Buying properties at this point in time is a clever move if you have spare money to invest or if you want to get into the real estate business. Some property owners who are willing sellers are finding it tough to sell, as the recession has taken its toll over the past couple of years. This is when you will find an excellent buy and good value for your money.
With the real estate market climbing slowly back into recovery mode, strike while the iron is hot.
Buying low and selling high should be the mantra if you would like to start your own property portfolio.
Investors are spoilt for choice and have never been in a stronger position with such a variety of real estate available.
Borrowing money from banks and institutions is generally quite tough, but there are other ways of seeking the advice and borrowing money when buying and investing in real estate.
Equity companies are pro-active, and take small start-up businesses under their wings whilst growing the business, offering a hands-on approach and assisting with the management and the businesses that they support. These private equity companies are delighted to hear from you especially if your property investment business has potential.
Having the backing of a professional team to assist you along the way when starting up your own property portfolio is also important: these should include an attorney knowledgeable in property law, a really expert architectural and building team, someone who is reliable and honest to assist in renting out your property, and a reputable agent or broker to handle the sale of your property should the need arise.
The above pointers should help guide you in the right direction on how to start your own property portfolio.
Thursday, February 24, 2011
Friday, February 18, 2011
Good time for buying property
Residential property prices declined in January 2011, albeit from a solid base following their strong recovery last year. However, according to bond originator ooba conditions are favourable for homebuyers to consider getting onto the property ladder.
Market conditions are now favourable for homebuyers to consider getting onto the property ladder, says ooba.
The latest statistics from the oobarometer price index showed a year-on-year decline in the average purchase price of 6.3% to R797 011 in January 2011 from R850 513 a year earlier. The average purchase price of a first time buyer declined by a modest 1.6% year-on-year to R576 675, from R585 992 a year ago.
According to ooba CEO, Saul Geffen, while residential property prices are coming off their recent highs, the period of deflation is likely to be short lived with expectations for overall flat growth for 2011.
Additional statistics also tracked by ooba show there has been a continued trend by South Africa’s major lenders to ease up on their lending criteria. “Over the last year we have seen the main lenders continue to relax their lending criteria and this has continued in January 2011 with the size of the deposit buyers are required to put down showing a significant decline.”
In January the average deposit as a percentage of the purchase price was also down by 41.8% year on year to R117 396, equivalent to 14.7% of the purchase price. The average initial decline ratio also declined by 4.4% to 46.0% in January 2011 from 50.4% a year ago. There was further positive news in January as the effective approval ratio increased by 6.0% year-on-year to 65.6%.
Geffen says in addition to the improved lending environment, the recent decline in prices presents an ideal bargaining opportunity for new homebuyers. “For those homebuyers who have all their ducks in a row, including a deposit to put down, now could be the perfect time to begin negotiations on a property.”
Comments published by Property 24
Market conditions are now favourable for homebuyers to consider getting onto the property ladder, says ooba.
The latest statistics from the oobarometer price index showed a year-on-year decline in the average purchase price of 6.3% to R797 011 in January 2011 from R850 513 a year earlier. The average purchase price of a first time buyer declined by a modest 1.6% year-on-year to R576 675, from R585 992 a year ago.
According to ooba CEO, Saul Geffen, while residential property prices are coming off their recent highs, the period of deflation is likely to be short lived with expectations for overall flat growth for 2011.
Additional statistics also tracked by ooba show there has been a continued trend by South Africa’s major lenders to ease up on their lending criteria. “Over the last year we have seen the main lenders continue to relax their lending criteria and this has continued in January 2011 with the size of the deposit buyers are required to put down showing a significant decline.”
In January the average deposit as a percentage of the purchase price was also down by 41.8% year on year to R117 396, equivalent to 14.7% of the purchase price. The average initial decline ratio also declined by 4.4% to 46.0% in January 2011 from 50.4% a year ago. There was further positive news in January as the effective approval ratio increased by 6.0% year-on-year to 65.6%.
Geffen says in addition to the improved lending environment, the recent decline in prices presents an ideal bargaining opportunity for new homebuyers. “For those homebuyers who have all their ducks in a row, including a deposit to put down, now could be the perfect time to begin negotiations on a property.”
Comments published by Property 24
Thursday, December 2, 2010
House prices top 2008 peak
Although housing activity as measured by the number and value of sales is still some 50% below the level recorded at the height of the boom, house prices have recently surpassed their February 2008 peak.
House prices fell by only 8% from peak to trough (February 2008 to May 2009) in contrast to many international markets like the US, UK and Europe where house prices fell by up to 30% over the past two years.
Latest housing data from FNB show that in November the average price of a house was 2,8% higher than the peak recorded in February 2008. That means that house prices fell by only 8% from peak to trough (from February 2008 to May 2009) and is in contrast to many international markets like the US, UK and Europe where house prices fell by up to 30% over the past two years.
Many of these housing markets have yet to see prices recover to pre-recession levels. For instance, in Ireland house prices are now back to levels last seen in 2002, according to latest data from UK-based property group Knight Frank.
FNB’s latest housing index further shows that South African house prices are up 36,5% over the past five years to November. That’s roughly in line with inflation, which means that in real terms (after adjusting for inflation) South African homeowners have seen little, if any, growth in the value of their residential bricks and mortar over the past five years. But over the 10 years to November house prices are up a healthy 205%. That translates into real growth of 66%.
Homeowners and property investors should, however, not expect too much action on the house price growth front over the short term. FNB property strategist John Loos says despite signs of a mild improvement in residential demand the market still faces a number of challenges.
The key longer-term challenge for the residential market remains the high household debt-to-disposable income ratio, which was still at a record high of 78,2% in the second quarter. Says Loos: ``The still-high household debt ratio, unfortunately, leads us to expect another pedestrian year in 2011 for residential property, following a very mild short term up tick.’’ - Info supplied by Property 24.
House prices fell by only 8% from peak to trough (February 2008 to May 2009) in contrast to many international markets like the US, UK and Europe where house prices fell by up to 30% over the past two years.
Latest housing data from FNB show that in November the average price of a house was 2,8% higher than the peak recorded in February 2008. That means that house prices fell by only 8% from peak to trough (from February 2008 to May 2009) and is in contrast to many international markets like the US, UK and Europe where house prices fell by up to 30% over the past two years.
Many of these housing markets have yet to see prices recover to pre-recession levels. For instance, in Ireland house prices are now back to levels last seen in 2002, according to latest data from UK-based property group Knight Frank.
FNB’s latest housing index further shows that South African house prices are up 36,5% over the past five years to November. That’s roughly in line with inflation, which means that in real terms (after adjusting for inflation) South African homeowners have seen little, if any, growth in the value of their residential bricks and mortar over the past five years. But over the 10 years to November house prices are up a healthy 205%. That translates into real growth of 66%.
Homeowners and property investors should, however, not expect too much action on the house price growth front over the short term. FNB property strategist John Loos says despite signs of a mild improvement in residential demand the market still faces a number of challenges.
The key longer-term challenge for the residential market remains the high household debt-to-disposable income ratio, which was still at a record high of 78,2% in the second quarter. Says Loos: ``The still-high household debt ratio, unfortunately, leads us to expect another pedestrian year in 2011 for residential property, following a very mild short term up tick.’’ - Info supplied by Property 24.
Sunday, November 21, 2010
50 Points rate cut!
The South African Reserve Bank’s Monetary Policy Committee (MPC) lowered the key monetary policy interest rate – the repo rate – by another 50 basis points to 5,5%. On the back of this latest cut in the repo rate, Absa announced that its lending rates to the public, i.e. prime and variable mortgage rates, will decline by the same magnitude to a level of 9%, effective from 19 November 2010.
Interest rates have been cut by a cumulative 650 basis points since December 2008, which brings the mortgage rate to its lowest level since December 1973, while the prime rate is back to a level last seen in May 1974. On the back of the further drop in the mortgage rate, monthly repayments on mortgage loans will in general be 33,5% lower compared with early December 2008 when the mortgage rate was still at a level of 15,5%.
The further cut in interest rates came on the back of recent developments in respect of the domestic economy. Year-on-year growth in manufacturing production tapered off to only 1,4% in September; employment remained under pressure up to the third quarter of the year; and the Reserve Bank’s leading business cycle indicator moved largely sideways in the past few months up to August, suggesting that the performance of the economy could remain around current levels towards the end of the year and into early 2011.
Consumers continue to experience some financial pressure in the wake of still high levels of debt in relation to disposable income, job losses and relatively tight credit conditions. Growth in credit extension to the household sector improved during the course of the year after bottoming in late 2009, but is still well below the 10% level on an annual basis. Consumer confidence was largely unchanged in 2010, while business confidence came under further pressure in October.
Consumer price inflation, at 3,2% year-on-year in September, is at its lowest level since December 2005. This was to some extent the result of continued rand strength on the back of a weak US dollar, while food price inflation remains benign. The CPI inflation rate is forecast to remain low in the rest of the year and is expected to rise only gradually during 2011.
The direction of interest rates in 2011 will to a large extent depend on economic developments and consequent movements in key economic indicators, such as consumer price inflation, during the course of the year.
Article By Jacques du Toit 18 Nov 2010 and private Property.
Interest rates have been cut by a cumulative 650 basis points since December 2008, which brings the mortgage rate to its lowest level since December 1973, while the prime rate is back to a level last seen in May 1974. On the back of the further drop in the mortgage rate, monthly repayments on mortgage loans will in general be 33,5% lower compared with early December 2008 when the mortgage rate was still at a level of 15,5%.
The further cut in interest rates came on the back of recent developments in respect of the domestic economy. Year-on-year growth in manufacturing production tapered off to only 1,4% in September; employment remained under pressure up to the third quarter of the year; and the Reserve Bank’s leading business cycle indicator moved largely sideways in the past few months up to August, suggesting that the performance of the economy could remain around current levels towards the end of the year and into early 2011.
Consumers continue to experience some financial pressure in the wake of still high levels of debt in relation to disposable income, job losses and relatively tight credit conditions. Growth in credit extension to the household sector improved during the course of the year after bottoming in late 2009, but is still well below the 10% level on an annual basis. Consumer confidence was largely unchanged in 2010, while business confidence came under further pressure in October.
Consumer price inflation, at 3,2% year-on-year in September, is at its lowest level since December 2005. This was to some extent the result of continued rand strength on the back of a weak US dollar, while food price inflation remains benign. The CPI inflation rate is forecast to remain low in the rest of the year and is expected to rise only gradually during 2011.
The direction of interest rates in 2011 will to a large extent depend on economic developments and consequent movements in key economic indicators, such as consumer price inflation, during the course of the year.
Article By Jacques du Toit 18 Nov 2010 and private Property.
Sunday, September 26, 2010
Still a buyer's market!
Residential demand weakens further
22 Sep 2010
Demand for residential property has weakened again for the second successive quarter in the third quarter (3Q) of 2010 and primary residential buying still predominates.
The 3Q FNB Estate Agent survey showed the sample of estate agents surveyed in 3Q perceived residential demand to have weakened for the second consecutive quarter, after a previous strengthening trend that started in late 2008.
On a scale of 1 to 10, the agent demand activity rating declined from 5,96 to 5,66.
John Loos, property economist at FNB, said while seasonal factors can play a role, year-on-year (y/y) growth in the activity rating also declined from a previous quarter’s +24,4% to 0,2% in 3Q. “This suggests that the slowdown is more than just seasonal.”
What are the causes of this declining demand?
The agents surveyed continued to point to apparent unrealistic pricing in the market. Estimated average time of properties on the market was still a lengthy 15 weeks and 4 days in Q3. “While this is down from the previous quarter’s 17 weeks and 1 day, it would still appear far too long for an average, given that in the healthier market days of 2005/6 the average time was generally below two months,” Loos said.
“Furthermore, the percentage of sellers having to drop their asking price remained stubbornly unchanged from the previous quarter at 81%, and the average price drop for that majority having to drop their prices was estimated at -12%.”
He says all this points to the fact that it is still very much a buyers’ market and that a select group of buyers, who have access to financial resources, generally possess significant bargaining power.
“The existence of a buyers’ market still has much to do with ongoing household sector financial pressure, which restricts demand while also promoting financial pressure-related selling on a very significant scale. Fifty-two percent of agents surveyed believe that household incomes have fallen far behind average house prices. This is well up from the 38% reading in the corresponding quarter a year ago.”
But then there are also restrictions that aren’t market-related. “Agents are increasingly citing tight bank lending criteria or the restrictive National Credit Act (NCA) as being negative factors for the market.”
Perhaps a tell-tale sign of the times, primary residential demand remained high in Q3 and unchanged at 90% of total buying. This is at the expense of non-essential buying, such as buy-to-let, buying for relatives and holiday homes. “Back in 2007, primary residential demand was significantly lower at around 80%.”
In terms of specific groups’ buying trends, previously-disadvantaged groups seem to have held their own while first-time buyers and single are struggling. “On a relative basis, the agent survey suggests that the black population group has maintained their share of suburban home buying, and possibly even increasing it a little in 2010.
“However, as at the beginning of 2007, single people buying property were estimated at 21% of total buyers. This group has diminished to an estimated 13% in the Q3 2010 survey. This is weaker than the 15% recorded in the previous quarter’s survey.
“In contrast to this, couples, expressed as a percentage of total buyers, increased to 87% from the previous quarter’s 85%.”
Loos ascribes this trend to singles being more vulnerable to economic shocks, couples being able to pool their resources together for finance and singles being more flexible than families in terms of renting and moving between properties.
Another buyer group that is showing alarming weakening signs is first-time buyers. “From the previous quarter’s 19%, the percentage of first-time buyers has declined to 15% in the Q3 survey.”
In terms of seller trends, financial pressure crops up again. “Agents continue to estimate the largest percentage to be sellers selling their homes in order to downscale due to financial pressure. This percentage estimate rose from 20% in the 2nd Quarter (2Q) to 25% in Q3 2010 – the first increase since 2Q 2009.
“Simultaneously, the estimated percentage selling in order to upgrade declined mildly from 15% in Q2 to 12% in Q3.”
An encouraging trend is the drop in emigration selling. “The emigration estimate remains low at 6% of total selling, which is down by a percentage point from the previous quarter’s 7%. This is a far cry from the 20% recorded at the height of the 2008 emigration surge.”
All this points to the buyers’ market remaining firmly entrenched, but with both buyers and sellers experiencing financial strain and high debt levels. With residential demand taking pains, sellers – especially those who are under financial pressure – would therefore be well-advised to keep their prices market-related if they have any hope of achieving a reasonably quick sale. – Eugene Brink
Information supplied by Property24
22 Sep 2010
Demand for residential property has weakened again for the second successive quarter in the third quarter (3Q) of 2010 and primary residential buying still predominates.
The 3Q FNB Estate Agent survey showed the sample of estate agents surveyed in 3Q perceived residential demand to have weakened for the second consecutive quarter, after a previous strengthening trend that started in late 2008.
On a scale of 1 to 10, the agent demand activity rating declined from 5,96 to 5,66.
John Loos, property economist at FNB, said while seasonal factors can play a role, year-on-year (y/y) growth in the activity rating also declined from a previous quarter’s +24,4% to 0,2% in 3Q. “This suggests that the slowdown is more than just seasonal.”
What are the causes of this declining demand?
The agents surveyed continued to point to apparent unrealistic pricing in the market. Estimated average time of properties on the market was still a lengthy 15 weeks and 4 days in Q3. “While this is down from the previous quarter’s 17 weeks and 1 day, it would still appear far too long for an average, given that in the healthier market days of 2005/6 the average time was generally below two months,” Loos said.
“Furthermore, the percentage of sellers having to drop their asking price remained stubbornly unchanged from the previous quarter at 81%, and the average price drop for that majority having to drop their prices was estimated at -12%.”
He says all this points to the fact that it is still very much a buyers’ market and that a select group of buyers, who have access to financial resources, generally possess significant bargaining power.
“The existence of a buyers’ market still has much to do with ongoing household sector financial pressure, which restricts demand while also promoting financial pressure-related selling on a very significant scale. Fifty-two percent of agents surveyed believe that household incomes have fallen far behind average house prices. This is well up from the 38% reading in the corresponding quarter a year ago.”
But then there are also restrictions that aren’t market-related. “Agents are increasingly citing tight bank lending criteria or the restrictive National Credit Act (NCA) as being negative factors for the market.”
Perhaps a tell-tale sign of the times, primary residential demand remained high in Q3 and unchanged at 90% of total buying. This is at the expense of non-essential buying, such as buy-to-let, buying for relatives and holiday homes. “Back in 2007, primary residential demand was significantly lower at around 80%.”
In terms of specific groups’ buying trends, previously-disadvantaged groups seem to have held their own while first-time buyers and single are struggling. “On a relative basis, the agent survey suggests that the black population group has maintained their share of suburban home buying, and possibly even increasing it a little in 2010.
“However, as at the beginning of 2007, single people buying property were estimated at 21% of total buyers. This group has diminished to an estimated 13% in the Q3 2010 survey. This is weaker than the 15% recorded in the previous quarter’s survey.
“In contrast to this, couples, expressed as a percentage of total buyers, increased to 87% from the previous quarter’s 85%.”
Loos ascribes this trend to singles being more vulnerable to economic shocks, couples being able to pool their resources together for finance and singles being more flexible than families in terms of renting and moving between properties.
Another buyer group that is showing alarming weakening signs is first-time buyers. “From the previous quarter’s 19%, the percentage of first-time buyers has declined to 15% in the Q3 survey.”
In terms of seller trends, financial pressure crops up again. “Agents continue to estimate the largest percentage to be sellers selling their homes in order to downscale due to financial pressure. This percentage estimate rose from 20% in the 2nd Quarter (2Q) to 25% in Q3 2010 – the first increase since 2Q 2009.
“Simultaneously, the estimated percentage selling in order to upgrade declined mildly from 15% in Q2 to 12% in Q3.”
An encouraging trend is the drop in emigration selling. “The emigration estimate remains low at 6% of total selling, which is down by a percentage point from the previous quarter’s 7%. This is a far cry from the 20% recorded at the height of the 2008 emigration surge.”
All this points to the buyers’ market remaining firmly entrenched, but with both buyers and sellers experiencing financial strain and high debt levels. With residential demand taking pains, sellers – especially those who are under financial pressure – would therefore be well-advised to keep their prices market-related if they have any hope of achieving a reasonably quick sale. – Eugene Brink
Information supplied by Property24
Wednesday, August 11, 2010
Property prices to fall again?
The FNB Estate Agent Survey for the second quarter of 2010 showed agents pointing to weaker demand than that of the previous quarter. Of concern, too, was a sharp up-tick in the estimated average time of a property on the market, from a previous quarter’s 12 weeks and four days to 17 weeks and one day. This suggests that price levels have got further out of touch with reality. The implications could be that prices begin to come under pressure, and indeed in June we have seen a slowing in the pace of acceleration in house price growth. Prices to fall again?
Following relatively pedestrian growth in the median property price over the past few months, July marked the first month of real growth in the sector. The median house price increased by a further 0.8% m/m in July (2.3% m/m in June), marginally above the average monthly increase of 1.2% recorded since the start of the year, signalling an improvement in both demand and supply fundamentals. Thus, the median house price increased to R597 160 from a revised R592 500 in June, representing an increase of 7.3% y/y from 3.2% y/y in June. Although this increase is sharp, it needs to be borne in mind that this improvement is from a very low base this time last year, when the median price contracted by around 5%. In real terms, the median price jumped to 3.2% y/y from -1.0% y/y in June, in part also due to the falling inflation profile. Standard Bank expects inflation to moderate to 3.9% y/y in July from 4.2% y/y in June. Confidence sees market improving
Info supplied by Cyberprop!
Following relatively pedestrian growth in the median property price over the past few months, July marked the first month of real growth in the sector. The median house price increased by a further 0.8% m/m in July (2.3% m/m in June), marginally above the average monthly increase of 1.2% recorded since the start of the year, signalling an improvement in both demand and supply fundamentals. Thus, the median house price increased to R597 160 from a revised R592 500 in June, representing an increase of 7.3% y/y from 3.2% y/y in June. Although this increase is sharp, it needs to be borne in mind that this improvement is from a very low base this time last year, when the median price contracted by around 5%. In real terms, the median price jumped to 3.2% y/y from -1.0% y/y in June, in part also due to the falling inflation profile. Standard Bank expects inflation to moderate to 3.9% y/y in July from 4.2% y/y in June. Confidence sees market improving
Info supplied by Cyberprop!
Friday, March 26, 2010
Interest rate cut - a gift
The interest rate cut announced yesterday by the reserve bank surprised most of the economist as every one expected an "unchanged" announcement. This is good news for everybody with debt. You will save about R264/m on a bond of R800 000, which will result in a saving of R3168 over a year. (R64000 over the 20 years)
If you decide to keep your monthly installment the same will you reduce your repayment term with about 5 years. This will have the same effect on your total payment made over the total period as a 8.75% interest rate.
It does not matter which way you look at it, this rates cut is a small gift from the reserve bank. Spend / Invest it wisely.
Greetings
If you decide to keep your monthly installment the same will you reduce your repayment term with about 5 years. This will have the same effect on your total payment made over the total period as a 8.75% interest rate.
It does not matter which way you look at it, this rates cut is a small gift from the reserve bank. Spend / Invest it wisely.
Greetings
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About Me
- Jacques
- Since 1997 am I a full time real estate professional with all the basic qualifications and registrations required by the EAAB but also obtained a Diploma in Sectional Scheme Management (STSM) from the UCT