Perhaps South Africa looks better on a postcard than it does up close. That certainly seems to be the feeling of a growing community in this country who are selling homes, and plotting their escape routes.
John Loos is an FNB property specialist. As reported by Business Tech, Loos was speaking on Radio 702 this morning. He claimed that a whopping 7.2% of South Africans are putting their houses on the market ‘because they want to emigrate’.
This has shot up from just 2% back in 2013. Even at the end of 2016, that figure stood at 5.8%. But an infamously rough year for SA’s economy seems to have driven that figure to a high, as more people look to up-sticks and go elsewhere.
Loos cited a weakening rand, potential tax hikes, and increasing utility costs as the factors which are helping people make their minds up over a future abroad:
“The weak rand makes earning in any other hard currency that much more attractive, and I think that can lead to a skills drain. Anyone who tries to tell you that a weak rand is good for the economy is dreaming, it contributes to your skill base erosion.”
“The general tax situation over the last couple of years is that government finances are deteriorating which means they are looking for more ways to make up the revenue shortfall.”
“We have seen it in the lack of adjustment for bracket creep in personal tax, and of course we have also seen it with municipal rates and tariffs have been climbing significantly faster that inflation – most notably in electricity.”
As more people choose to leave Mzansi, a ‘brain drain’ is expected to take hold of the country. Those with the resources to set up overseas usually take a wealth of knowledge and skill with them. As these ‘skilled professionals’ leave, South Africa won’t be able to fill certain technical vacancies with its own citizens.
A dire economy doesn’t just hit us hard in the moment. Its impact will be felt profoundly for years to come.
If you’re dreaming of one day purchasing a holiday home somewhere on the coast, and space is important to you, Durban might be the best option. On the other hand, if property costs are your main concern, Port Elizabeth or East London might be places to consider.
Stats SA takes a dive into building statistics to find out where the most spacious homes are being built, and what the average construction costs are.
One thing to consider carefully is the type of living space you would enjoy during your vacations. Would you prefer the security of a townhouse near the beach, or the open property of a regular dwelling-house? Or are you happy to live in a high-rise flat with an open view of the ocean?
Building plans with the most generous floor area were approved by eThekwini (Durban), for houses, townhouses and flats. Over a five-year period from 2012 to 2016,1 the average floor area for a dwelling-house in South Africa’s third-most populous city was 233m2
How large is this exactly? Floor plans differ substantially from one another, but to get a rough idea, think of a house with four spacious bedrooms, two bathrooms and a double garage (plus a kitchen, etc.).
Cape Town’s figure for houses might seem unusually small. A closer look at the data show that the city has approved building plans for large numbers of smaller-sized residential units (between 30m2 to 80m2) across the city, in particular in Mitchells Plain and Khayelitsha.
Construction costs in eThekwini are also the most expensive, but only for houses and flats. Tshwane takes the top spot for townhouses; it would cost you an average of R8 575 per square metre to build a townhouse in the capital city, according to data for 2016.
Buffalo City, which includes the coastal city of East London, recorded the lowest costs for townhouses and flats during the same year.
Interestingly, flats have grown increasingly popular in South Africa’s cities over the last couple of years, even outstripping the construction of townhouses. For every 100 plans rubber-stamped for houses in 2013, 26 plans were approved for flats. In 2016, this ratio had risen to 59.
The demand for townhouses has also increased, but not as much. In 2013, the ratio of townhouse plans approved for every 100 dwelling-house plans was 25, climbing to 33 in 2016.
The increasing demand for flats has occurred in nearly all of the eight metros, but particularly in Tshwane, Cape Town and eThekwini. In terms of the capital, one only has to think of recent developments in areas such as Hatfield, Pretoria CBD and around the new Menlyn Maine complex.
Despite the rise in flats and townhouses, houses still dominate the residential landscape. According to the 2016 Community Survey, 64% of households in metro areas lived in formal houses, while 2,6% lived in townhouses and 5,4% in flats.
The metros are home to 40% of South Africa’s population and many people are migrating to the cities in search of work opportunities. The economic hub of Gauteng, which is home to three of the metros, is an especially attractive destination for those seeking employment.
A growing urban population is bound to place pressure on the availability of land for residential development, and it remains to be seen how this will influence the demand for compact living spaces such as townhouses and flats. Whatever lies ahead, the changing residential market is bound to influence your future decisions on where you want to buy a property to live, work and – most importantly – play.
Informatio supplied by Stats SA
Yes there are loads of well-respected and reputable Estate Agents in our Industry.
Unfortunately there are also many inexperienced, fly by night unregistered and unethical rascals out there tarnishing our industry.
Homeowners are urged to check the credentials of an estate agent before making use of their service.
Here are some pointers to assist Homeowners:
GENUINE LEGITIMATE – check if your agent is registered with the EAAB, ask for a copy of their Fidelity Fund Certificate.
EXPERIENCE – how long has he/she been in business, what is their background, experience and qualifications.
HONESTY AND INTEGRITY – check their testimonials ask for a contact list and verify that their testimonials are genuine.
TRACK RECORD – ask for a contact list of past clients and verify
MARKETING – with 95% of all buyers starting their initial search for a new home online it’s vital that your agent and his company have a strong online footprint. Check their company website and their social media links. Some Professional estate agents also have a Personal Webpage, showcasing their professional credentials like, resume, testimonials, mandates, Blogs and videos.
I am often asked “what is Agent Assisted Selling”?
Technology has changed the way we do business and Real Estate is no exception.
Gone are the days when the only method of selling your home was through a traditional estate agent. Online searches and listings have made it easier for prospective home buyers to find their dream homes. The internet has simplified and enhanced the ability of home owners to market and sell their homes without an estate agent. However listing your home on multiple websites is no big deal and is only a small part of the selling process.
The downside and biggest barriers that private sellers have is “lack of exposure, lack of advice, lack of tools and skills that experienced estate agents have to market, negotiate and sell their own home. Nor the time to present their home in a professional and polished manner that would attract potential buyers”.
Agent Assisted Selling allows the homeowner to take control. You choose what services you require and only pay for those services. Take a look at our fees.
Using our Agent Assisted Service homeowners are on their own but not alone. Our professional experienced estate agents are only a phone call away to assist and advise you – at no additional cost.
The internet has also made it very easy for “other” players to enter the market – Techno geeks, and other professionals. But be warned they may not possess the expertise that experienced estate agents have to guide and assist you throughout the process.
You may ask “how would I know that the agent I employ is suitably experienced and qualified?”
Real Estate Professionals should have a prominent online footprint (not only a FB page). Your agent should, in addition to their agency website, also have their Personal Website or Webpage. Their Personal Webpage will showcase who they are (resume), what they are (testimonials), credibility, expertise and knowledge of the real estate market.
Let’s take a look at how much you could save using the services of Olr-sa.com – Online Realty.
What happens to your personal brand when you leave your agency?
You have to make a name for yourself! Be proactive and develop, maintain and strengthen your personal brand with purpose and passion.
Thanks to the internet, smartphones and the popularity of social media, the real estate industry has never been more competitive.
As a progressive estate agent wanting to attract more clients, close more deals, and continue to grow your business, you will need to do more to stand out from the competition.
“Personal branding is about managing your name – even if you don’t own a business – in a world of misinformation, disinformation, and semi-permanent Google records. Going on a date? Chances are that your “blind” date has Googled your name. Going for a job interview? Ditto.” – Tim Ferriss
It’s extremely difficult and almost impossible to grow your business if no one in your community recognizes your name! For estate agents in particular it’s vital to have a strong personal brand.
How to get started with personal branding.
Taking your time to zero in on your target audience will assist you to build a personal brand that effectively connects with your audience, makes you look good and effectively connects with prospects and grow your business.
What are your areas of expertise – why should clients work with you instead of other agents – what are you passionate about – why did you become an estate agent – what are your career goals.
Why would a client want to work with you? What was their experience when working with you? What mattered most during your interaction with you? Would they refer you to their friends? Why or why not? What could you do better for future clients?
Your own personal branded website would be the cherry on top, but is expensive to develop and maintain.
AMRealty.co.za - Agents' MUTUAL have developed a personal webpage for progressive estate agents that is affordable, effective and extremely easy to use and maintain.
Some standard features included are:
A big part of building your personal brand will involve doing what you can to leverage yourself as a helpful resource to your clients. Investing some time to create informative content in your blogs will help to differentiate you from your competitors, build trust and get your name out there.
Blogging can also be linked to your social media marketing campaign.
MARKET REVIEW - Information supplied by Lightstone
As at the end of June 2017 the national house price inflation index was at 3.9 %. Looking at the overall picture at provincial level the market has evidently stabilized in the 3%-7% range after a slowdown over recent months. The Western Cape, Eastern Cape and Mpumalanga province are still slowing down trailing this category of indices, with the latter dropping near the 0% mark. Contrary to other provinces the Northern Cape continues its optimistic growth currently at an unrivalled 20.2% per annum. Showing optimism as well and good recovery is the Limpopo index which has broken above the stability range. The inland municipalities Ekurhuleni, City of Tshwane and City of Johannesburg metros are growing stably at rates between 2% and 6% whereas the coastal municipalities are generally performing above this range. This relationship extends to all coastal and inland properties as shown by their respective indices. Both the Low value and Mid value wealth segments continue to buck the trend by growing at more than 7% annually. The High and Luxury wealth segments are inflating at rates below 3% with the Luxury inflation testing the 0% rate.
For more information and graphs click here
Why Blogging is vitally important for Real Estate Professionals.
Well-written blogs will reflect your credibility and expertise and your position as a leader in the real estate market.
Blogging is a platform where you can display your knowledge about the real estate market building trust with your prospects. Clients will be more likely to trust you with their real estate transactions.
You can connect with your clients and develop better client relationships by becoming a source of information. Providing relevant information clients are more likely to contact you when they are ready to buy or sell real estate.
Blogging provides an opportunity to drive traffic to your personal webpage by providing your audience with compelling content. This should be the foundation or all your social media platforms. Your posts should have links to your blog and personal webpage, giving your followers an opportunity to visit your personal webpage and engage with you.
By having your own personal webpage you are creating your online personal brand, as your webpage is a direct reflection of your authority, goals and services. A “Go-To” resource for your clients.
By using effective and relevant keywords in the content of your personal webpage you will increase your search engine results. The geographical area you work in, all about you, your social clubs, sport and any other personal sphere of influence. Submitting blogs to relevant sites is an important part of your overall marketing arsenal.
To stay one step ahead of your competition it has become vital to become the only resource for your clients, creating your personal brand with your personal webpage is the best way to maximize the development and growth of your real estate business.
Register now to create your personal page - click here
WHY IT’S VITALLY IMPORTANT FOR PROFESSIONAL ESTATE AGENTS TO HAVE THEIR OWN WEB PAGE.
The fact that you are reading this blog means that I have achieved what I set out to achieve – inbound marketing and soon you will engage further with me.
Outbound marketing means putting your message in front of people whether they want to hear it or not. As a result, its techniques are often intrusive and annoying.
Now I can share with you why it’s vital for you to engage with your audience via social media and other online platforms.
You can register as an agent on our website and create your own personal webpage this is the link.... register
While South Africa is currently in a recession, the property market has been on the decline for a number of years, say property economists.
John Loos, FNB property economist, said FNB’s May year-on-year house price index showed a growth of 4.7%. He said the single-digit growth in house prices was of concern as it was below inflation and would mean that a seller would sell their home at a loss.
Loos explained that a person who bought a house in 2001 and sold the house now could make a sizeable profit of anything up to 50 or 60%. However, a person who bought a house last year and was selling it now would be making a loss.
He said with the lower demand to buy property, houses stayed on the market longer. What was also problematic, he said, was that sellers refused to lower their asking price for fear of making a loss.
“All of this has been caused by a stagnant South African economy which has been in the doldrums for years,” Loos said.
“This, coupled with social tension the country is going through, does not bode well for the future as it will create political and economic instability.”
He did, however, say that this was not as bad as the housing bubble crash of 2008.
Another economist, Professor Bonke Dumisa, said sellers were holding on to their properties for longer in the hope that they would get a better price. He said they had become reluctant to sell.
Because of low demand and an oversupply of houses, Dumisa said this would be the best time for people to buy as “prices will be relatively lower” for people looking for a bargain.
He also noted that there were areas not affected by the change in the economy, among them gated estates.
Dumisa said people from these areas were generally well-off.
Keith Wakefield, of Wakefields estate agents, said the property industry was not immune to what happened in the economy. He said house volume sales were down.
Wakefield said the downturn in the economy would make it harder for people who wanted to buy property to get loans for bonds, even though the banks were keen on supplying them.
“Sellers of property must price their property realistically,” he said.
He added that people who overpriced their homes and did not take market-related prices into consideration would have difficulty selling them and would probably be forced to drop the price later.
He advised sellers to look at similar properties when determining their asking price.
Wakefield also encouraged buyers to try to have a substantial deposit when buying property because this would make their instalments more affordable.
Gary Nichols, provincial chairperson of the Institute of Estate Agents of South Africa, said members of the organisation had told him “they found the going hard”.
He said sellers were more conservative and buyers were taking more time deciding whether to buy a house.
He said sellers and buyers haggled over prices as sellers would not want to drop their price, while buyers wanted to buy a home at the cheapest possible price.
Estate agents, he said, had to ensure they worked harder. He also said banks were becoming more “pedantic” when it came to lending money in a bad economy.
South Africa | 29 June 2017, 06:05am
According to Standard Bank, the proportion of cash property transactions compared to mortgage transactions is increasing across all the major provinces.
This is mainly as a function of declining mortgages rather than an increasing number of cash transactions, and reflects tighter domestic credit conditions.
Of the cash transactions, Gauteng accounts for 34%, and Western Cape for 31%. However, Western Cape now has more cash than mortgage transactions, with cash transactions accounting for 56% of all transactions in the province.
“The Western Cape now attracts more affluent buyers who can pay cash for property, as opposed to middle-income buyers who rely on mortgage financing,” says a Standard Bank spokesperson.
“We use data from the Deeds registry for all registered property transactions in South Africa, both cash and mortgage transactions; we then estimate the volume of property transactions in SA.
“According to our estimates, property transactions in the fourth quarter of 2016 were at a low last seen in the first quarter of 2010, and were also 48% below the peak of the first quarter of 2007. This is not surprising given high interest rates and the soft labour market. Moreover, given low consumer confidence, households have been wary of financial commitments such as buying a home.”
The data shows that the number of cash and mortgage transactions is converging amid tighter credit conditions post-GFC (Global Financial Crisis). Data suggests that the share of cash transactions increased significantly from around 20% in 2006/07 to around 40% in 2009 (post-GFC); and then slipped to around 36% by the third quarter of 2011 before rising again. By the fourth quarter of 2016, cash transactions had risen to 46% of residential property transactions, the highest since the third quarter of 2002.
The sharp increase in the share of cash purchases in 2008 and 2009 was a function of mortgage transactions declining sharply rather than the number of cash transactions increasing. Likewise, mortgage transactions have fallen faster than cash transactions, particularly between the fourth quarters of 2015 and 2016, with mortgage transactions declining by 24.5% versus a 20% decline in cash transactions in the same period.
“This reflects adverse labour market conditions and tighter credit conditions, which limit the number of people able to access mortgages, whereas fewer such constraints apply to cash buyers. This situation echoes that of the financial crisis. We do not, however, expect a similar nominal decline in home prices as was experienced during the financial crisis. But we expect that the tight lending standards currently applied by lenders will hinder robust growth in property prices.”
Data shows that the median purchase price paid by cash buyers has been lower than that of mortgaged counterparts since around the third quarter of 2002. In the first quarter of 2017, Standard Bank estimates that the median purchase price paid by cash buyers was 24% lower than that paid by mortgaged buyers. Further, cash buyers buy relatively bigger properties, at a lower median price a square metre. In the first quarter of 2017, the price a square metre differential between cash and mortgage transactions was 32%.
“Cash buyers are usually in a better bargaining position, and also, sellers may be more amenable to offering discounts to cash buyers in trying to expedite transactions. This is also more likely when a property has been on the market for a long time. Related to this, cash buyers likely have more time to look around for bargains, which may include distressed sales. All of this can lead to higher price volatility in cash transactions.
“In absolute terms, both mortgage and cash transactions are falling. We expect a meaningful recovery in household credit extension only in the first half of 2018, which should support buying activity, particularly mortgaged-backed purchases.”
A regional perspective
Gauteng had the most property transactions at 42% of all transactions in 2016, followed by the Western Cape with 25%, KZN with 11.5%, and Eastern Cape with 6%. After the surge in house prices in the Western Cape, the volume of transactions rose significantly to 25% in 2016, from 19.5% in 2008, possibly as buyers chase yields.
The rest of the provinces (Free State; Limpopo; Mpumalanga; North West; Northern Cape) in 2016 accounted for a combined 13% of all property transactions in SA and roughly 2% could not be allocated definitively.
In contrast, data from BMR shows that these provinces (Free State; Limpopo; Mpumalanga; North West; Northern Cape) accounted for about 23% of household disposable income in 2016 or close to double the share of property transactions. This implies that while people derive a decent income in these provinces, they prefer homes in urban provinces such as Gauteng and the Western Cape.