Issue 7  -  April 2008

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Articles in this Issue:

  Bad Debt Could Dominate 2008
 


According to the National Credit Regulator more than 6.3 million South Africans have bad credit records. This figure could increase as prices spiral, fuel, food, interest rates, increased electricity tariffs will all place a huge burden on the consumers monthly budget.

a.. Repossessions of properties shot up by 50% last year and this is expected to grow to 75% by the end
     of 2008.
b.. Electricity prices could be increased by 53% or even 60% if approved.
c.. Monthly bond repayments on a one million rand bond at prime increased from R11 360-00 in January 2007
     to R12 800 last month at a prime interest rate of 14.5%. Expect another hike come 10 April 2008
d.. Car sales, which dropped 9.9 percent last year, are projected to drop a further eight percent this year
e.. The petrol price is projected to finish the year at a staggering R9.20 a litre

Get ready for some very creative budgeting over the next few months.

  Investigate Below the Surface
 


Buying a home is risky business. After a lengthy search, you have found the perfect house in the right suburb but neglected to investigate what lies beneath the surface. Sellers in South Africa hide behind the ‘voetstoots’ clause and can get away with a myriad of undetected defects.

“As a buyer you need to do your home-work”, advises Eric Bell, CEO of Inspect-A-Home, a national home inspection company. “Buying a home will probably be one of the most expensive investments you ever make – you don’t want to rush into it without checking out some key elements.”

Bell recommends a thorough examination of the home, paying particular attention to the following:

Damp

Do you notice signs of paint blistering or peeling off in places? You might also see dark stains or a white powdery substance on the walls, ceilings and the inside of cupboards. This could be an indication of damp and, depending on the severity, could be quite expensive to repair.

Leaky Roofs

A good time for house hunting is on rainy days, especially if you are looking at buying an older home. Look for evidence of a leaking roof – do you notice any water marks on the ceiling boards, are there any dried streaks running down the walls? Repairing a leaking roof can be extremely costly so ask the estate agent to find out if there are any problems with the roof.

Gutters

Does the home have gutters? If so, are they in proper working order? Check for holes, visible gaps, broken off ends and also ensure that the drains/gullies are clear of debris and look unblocked. Poor storm water management can cause subsidence of the foundations, which will cause cracks to appear.

Cracks

Most homes do have some light plaster cracks and these are not cause for concern. However, if you notice large cracks in the walls it would be best to have them analysed as these could be structural cracks, which could impair the integrity of the wall structure. If underpinning of the foundations and metal stitching of the cracks is required, be sure that there will be a large bill attached!

Swimming Pool

Ask the agent to find out if the pool motor and the filtration system are in good condition. How old is the pool and has the motor been repaired before? If it is a new pool, ask for a copy of the plans and the guarantee. Check the pool paving, is it in good condition and are there expansion joints in the paving around the pool? Can you notice any cracks on the steps or in the pool?

Plumbing

Turn on the taps to check the water pressure and ask the agent to find out how old the geyser is. If it is an old geyser, make sure that it is covered by your insurance policy. Your insurance might want the geyser installation updated to comply with the SANS 10254 regulations. Another tip: flush the toilets, check the base and behind it to see if you notice any leaks.

Paint

Does the home look like it has just received a new coat of paint? Most agents advise sellers to paint their homes before placing it on the market. However, sometimes a fresh coat of paint is used to hide things more sinister. Ask the agent if you can look inside the cupboards as often sellers touch up the walls but leave the cupboards in their original state. The inside of the cupboards might reveal cracks, damp or even tubes of polyfiller. If you do come across these, you need to investigate further.

Home Inspection

A professional home inspection is a worthwhile investment. Inspectors are trained to detect defects and they perform a thorough inspection from the roof cavity (check the integrity of the roof trusses) through to the boundary wall. They issue a detailed report, supported by photographs, highlighting areas of concern and what maintenance needs to take place to rectify any problems uncovered. They will also provide clients with an estimated cost to repair the items identified and this will provide you, the buyer, with a tool to negotiate a more realistic price.

 Article courtesty www.rodneyhayter.com

  South African Residential Property in the Red
 


The Standard Bank median house price index recorded a growth rate of -5.2% y/y in March. Affordability and valuation measures for South African residential property yield a broadly similar and consistent picture that provides some explanation with respect to the current state of the South African residential property market. Our findings indicate that residential property was relatively cheap in the late 1990s and in the first few years of the current decade.

The combination of lower interest rates and the marked improvement in the country’s growth dynamic in an environment of relatively cheap/affordable residential property was the catalyst for a boom in residential property prices. However, from 2004 house price appreciation outperformed growth in income and rentals, suggesting a dislocation of house price growth relative to its fundamental drivers. This signalled that house price growth was unsustainable at the 2004 to 2006 growth rates.

The reduction in affordability has been exacerbated by the reversal of monetary policy easing in the latter part of this period. By our estimates South African residential property remained expensive in level terms in the second half of 2007. However, the low growth rates that have been experienced since then are evidence of a market correction; in other words, a fall in prices to levels more in line with fundamentals. This is signalling a return of affordability and a re-appearance of value, albeit from a high base.

For housing affordability to improve further, disposable income must continue to exhibit solid growth, interest rates must moderate, and house prices must continue to exhibit low growth. An analysis of South Africa’s macroeconomic prospects suggests that, at least in the short term, the continuation of lower house price growth is the most likely path to further improvements in housing affordability and that house prices will continue to show weak growth.

Information supplied Standard Bank - Group Economics
By Sizwe Nxedlana

  April in the Garden
 
 


As the days get cooler and the green starts to fade from leaves and lawn, we become aware that autumn is upon us. Make the most of the cooler weather to get organised for spring.

Depending on how long the warmth of summer lingers, you can generally plant your winter bulbs in mid to late April. Bulbs are the easiest of plants to grow. They are very seasonal and in most cases are quick to flower and die down, but nothing can compare with the delight of these charmers when they pop their heads out in spring.

The types of bulbs you should consider for planting are Daffodils, Alliums, Hyacinths, Tulips, Ipheion, and Muscari. When planting bulbs, it is always a good idea to combine with a ground cover to provide a long-lasting display when the bulbs die down.

The key to successful planting is cool temperatures and moisture. If you plant bulbs too early, they may decompose due to conditions not conducive to growth. The location of the bulbs is also very important, most bulbs like the sun (not the heat) for at least 3 to 4 hours of the day - bear in mind the midday sun would not be ideal. Bulbs also like the soil to be fairly rich. Dig the bed over to about the depth of a spade and add a generous amount of compost. Do not use fresh manure as this can burn the bulbs. The key factor when planting bulbs is water. The roots need to be kept moist from the day after planting, so it’s a good time to look at installing a sprinkler system. They will need watering for about an hour every 4 to 5 days. If you are planting bulbs in a container, you can use a moisture meter to check the moisture level of the soil.

Daffodils (Narcissus) are probably the most popular choice of all bulbs and to many they herald the arrival of spring beautifully. There are many species and cultivars of Narcissus and experts will divide them into eleven different groups depending on the form and size of the flowers. The most popular daffodil is the bright yellow trumpet-shaped bloom, but there are many white, cream and pink cultivars, many of which have a wonderful perfume. Plant them in groups of 10 or more - daffodils look best when seen in groups.

Hyacinth (hyacinthus orientalis) are sweet smelling favourites in the garden or in containers. Also very good choice for growing indoors. When planting, plant among other plants which will give them some support. Plant in groups of same colour. Flower stems may be from 20cm to 30 cm high and the colour range includes various shades of pink, blue, rose, white and yellow. Hyacinth does not like heavy shade but also not midday sun. Plant bulbs 10cm deep and 12cm apart.

Alliums (Allium Neapolitanum) come in a large variety of species, including our everyday onions, garlic and chives as well ornamental plants. Florist allium can be planted as part of your rock garden or as a border. It looks great planted in groups but can be planted in containers. Florist allium prefers a slightly shaded spot and well-drained soil. Bulbs will thrive if watered regularly and deeply from planting onwards. Space the bulbs 4cm apart and cover with 3cm of soil.

Ipheion are easy to grow and produce masses of dainty sky blue, star-shaped blooms. They are very adaptable. The small bulbs may be planted in virtually any kind of soil, as long as it is loosened and kept reasonably well watered in winter and spring. They can also be grown in pots with great success. Plant the bulbs just a few centimetres below soil level and about 5 - 10 centimetres apart. Ipheion are quite frost-hardy and drought resistant, although they will respond favourably to good watering. Apart from regular watering in winter and spring, these plants need no attention.

There is nothing as spectacular as a bed of breathtaking tulips. Tall and stately, tulips make excellent bedding plants and also do well in containers and pots. Tulips come in a wide range of colours with many different species. The best time to plant untreated tulip bulbs is in the last week of April or the first week of May. Planting either before or after this will result in shorter stems. Occasionally mulch with peat or old compost to keep roots cool and help to retain moisture.

Other tasks to tackle in April

Get your garden in shape with some low-maintenance tasks.

Trim all your hedges and clean up underneath, particularly in winter rainfall areas.

Clean away all weeds and overgrown plants from below your trees and around them.

Potted plants may need planting into larger pots.

Lawns should be fed with fertilizer and watered in well - you may need to raise your lawnmower blades slightly.

Take out any spent vegetables. Dig and prepare the soil with fertilizer for the next crop.

If you are planning on planting seedlings, give them a good start by using compost and superphosphates and give a generous watering to improve the texture of the soil. Plant in the cool of early evening and water with a fine spray.

Save all your raked up leaves for the compost heap. If you don’t have one, this is a good time to start a compost heap.

Visit your local garden centre for good advice and the right equipment.