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| Golf Estates in South Africa Taking Off |
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Ongoing research over the past decade has proved to us conclusively that there are two principle reasons for investment in real estate around a golf course - security and community
During the past 10 years golf estate living has taken off in South Africa, and while there is certainly room for growth and further development, the parameters have changed dramatically and there is a great deal more for a potential developer to consider before taking a bold step into the golf estate development environment, says Dr Andrew Golding, CE of the Pam Golding Property group.
"Over the past two to three years, there has been a fundamental shift in the state of the market, which we believe is due to the nature and location of the product available, the status of the potential buyers, and the way in which these two interact. "The fact that golf estates have become the perceived 'rich man's haven' is as much due to basic economic principals as anything
else. To build a golf course of any quality costs in the region of R40m plus and once you've added the cost of the land, club house facilities, spa and other amenities, you have a business scenario not for the faint-hearted, with the only means of reclaiming the investment being through the sale of residential stands. "When the concept of golf estate living first took off, there was a substantial block of leisure market purchasers, looking for a weekend or holiday property, certainly enough to fuel the market and support broad-based speculative purchases.
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| House Price Trend Growth Firm in the First Quarter |
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Property Trends - House Price Index
According to the latest Absa House Price Index, nominal year-on-year growth in house
prices remained firm at 15,5% on average in the first quarter of 2007. This development
was supported by continued strong growth in transaction volumes during the period January
to March this year.
In March, nominal house price growth of 15,5% year-on-year was recorded in the middle
segment of the market (see explanatory notes), compared with a revised growth rate of
15,6% in February. This brought the average price of a house in this segment of the market
to about R902 200 in March 2007.
In real terms, year-on-year growth of 9,3% was recorded in February compared with a
revised growth rate of 9% in January, based on the headline consumer price index.
On a month-on-month basis, nominal price growth was lower at 1% in March after growth
of 1,3% was recorded in February. House prices increased by 1,4% month-on-month in
real terms in February (0,6% month-on-month in January).
| Absa Group Economic Research, 04-04-2007 |
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| US Slump Will Not Hit South Africa Property Market |
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The current slump in the United States’ housing market is unlikely to have a major impact on South Africa’s housing market
“Local house prices are unlikely to be affected materially by the lower segment housing crisis in the US,” said Standard Bank senior economist Elna Moolman.
“Local house prices are driven primarily by local economic factors.” The median house price in South Africa rose marginally in March to R580,000 from R570,000 in February, recording a 1.8 percent month-on-month growth, while year-on-year growth moderated modestly to 8.4% from 8.6% in February.
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| Property Heading for Meltdown? |
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The question is popping up increasingly amid growing concerns of mounting mortgage debt (in South Africa and overseas) and house prices that some believe have increased too far too fast
The big worry is that South African homeowners, like many of their US counterparts, could soon find themselves in the dreaded negative equity situation - when your mortgage debt exceeds the market value of your house.
That usually occurs when interest rates rise, property prices fall and homeowners start defaulting on their mortgage repayments. Such a scenario was evident in SA in the late Nineties after interest rates shot up to 25%.
However, data released in recent weeks by SA's banks and other housing commentators suggest that the chances of house prices falling (in nominal or even real terms) anytime soon are highly unlikely.
In fact, economists have been surprised by how buoyant housing sales and price growth still are, prompting some to upgrade their growth forecasts for 2007. Both Jacques du Toit (Absa) and John Loos (FNB) no longer expect house price growth to dip below 10% this year.
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| International Residential Property Buying On The Rise |
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Readers of the latest annual review published by Anne Porter's UK based partners, Knight Frank, have been gratified to learn that year on year South African residential property has emerged as one of the top five performers in the 30 precincts surveyed by Knight Frank
South African price increases were significantly bettered by those of only two countries, Bulgaria and Latvia, and were on a par with such top level performers as Belgium and Denmark, both of which saw value increases of around 20%. The Knight Frank review says that in under a decade investment in residential property beyond the borders of one's home country has caught on throughout the western world and, they add, this activity has changed from being the pursuit of a privileged minority to being a recognised investment channel for a far wider market.
| Knight Frank Annual Review, 23-03-2007 |
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| 2010 FIFA World Cup - Opportunities and Pitfalls |
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The 2010 FIFA World Cup South Africa has become the driver for infrastructural change within our country, the upgrading of Eskom, the announcement of new and upgraded airports and lots more
Leading up to 2010, the government has committed to an infrastructural investment of R410 billion and during 2010, visitors will spend over R10 billion in just 4 weeks. This event is about more than four weeks of soccer, it is also about the impact that it will have on all business sectors, pre- and post the event. No sectors will be more influenced than that of the property and construction industries.
Plenty of opportunities will arise for both sectors, which will lead to significant profits to be made – if, however, a conservative and sensible approach is taken. Consider the projected billions that will be spent on upgrading, improving and creating new infrastructures leading up to 2010 on projects such as the Gautrain and five magnificent stadiums being built in major cities around South Africa – all signs that construction is definitely experiencing a boom. Even after 2010, Coega will be fully underway, the mining industry should continue showing growth.
| Madison Property Fund Managers - Property Innovation, 20-03-2007 |
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| Soaring Cape Town Property Prices |
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Anyone sceptical about Cape Town residential property’s ability to continue to increase in value well ahead of the inflation rate should take a look at the sales figure for February
February sales are up year-on-year by 19.6 percent, giving a total sales figure for the greater Cape Town area of around R1944-billion.
Equally impressive is the fact that the average sales price in the greater Cape Town area is now R1.58-million, which is almost double the national average, now hovering around the R820 000-mark.
These figures are likely to be further improved in March which is on-track for being an all-time record month for Cape residential property.
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| Property Prices Recover, But For How Long? |
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The average price of a house is now going for about R891 700
The latest data on residential property prices show that growth has increased slightly but banks warn that it will level off again later this year.
According to Absa’s House Price Index (HPI), nominal house price growth was 15,4% year-on-year for February. A revised growth rate of 15,4% was also recorded for January.
This brought the average price of a house to about R891 700 in February 2007.
In December 2006 nominal house price growth of 13,5% year-on-year was recorded, down from a revised growth rate of 14% in November.
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| KwaZulu-Natal Could Be The Place To Invest in Property |
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KwaZulu-Natal is expected to have the best capital growth in its housing market
Gauteng and the Western Cape may be the country’s prominent property markets but don’t underestimate the capital growth in KwaZulu-Natal (KZN).
This is the view of John Loos, property strategist at FNB.
He expects that, of the three major provinces, KZN would have the best capital growth in its formal housing market, over the long term.
“The poor rates of building completion support this view,” he added.
KZN appears to have the biggest supply constraint of bringing new units to the market; this may have to do with land availability, which will ultimately affect price growth, reckoned Loos.
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| Property Industry Welcomes Budget |
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Players in the property industry have welcomed Finance Minister Trevor Manuel's Good News Budget
In addition, R11 billion will be spent on social housing, while teachers' salaries are to increase by R8 billion. Both these factors will boost the property market, because teachers, as a consumer segment, are a very important house-buying segment.
This is indeed a good news budget by any standard. Government expenditure, coupled with powerful economic growth and tempered inflation will augur well for house sales and rises in house prices during 2007 and beyond.
In turn, rentals continue to rise at more than 8% per annum. This will assist investors who are currently required to subside costs of property by as much as 30%, in the form deposits, in order to break even.
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