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Absa expects housing market to slow further |
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The Reserve Bank’s Monetary Policy Committee (MPC) hiked the key policy rate, the repo rate, by 50 basis points to 12%, prompting banks to raise their prime and mortgage rates to 15,5%.
Interest rates have been hiked by a cumulative 500 basis points since mid-2006.
CPIX inflation rose to 10,4% in April—its highest level since the 10,8% recorded in December 2002, and well above the 6% upper limit of the inflation target range.
Absa expects the upward pressure on inflation to continue in the near term, especially after domestic fuel prices were raised to record highs last week. If the food and fuel price components are excluded, CPIX inflation continued to rise, to a level of 6,1% in April 2008, which points to rising secondary inflationary effects in the economy.
In view of these developments and Reserve Bank expectations of CPIX inflation to reach the 6% level in only 2010, the MPC hiked interest rates once again, despite clear indications that consumer demand and growth in credit extension are declining.
With inflation expected to remain under upward pressure in coming months, Absa there is a risk of further rate hikes later in 2008.
On the property front, nominal year-on-year house price growth has slowed down markedly from 15,4% in mid-2007 to 4,3% in May this year. The significantly lower house price growth is believed to be the result of the upward trend in interest rates, declining growth in real household disposable income up end-2007, well as the impact of the National Credit Act, dampening housing demand.
The debt servicing cost of households has increased from 7,2% of disposable income in the first quarter of 2006 when the prime interest rate was at 10,5% and the household debt ratio was 68,8%, to about 11,8% in the first quarter of 2008, with the prime rate averaging 15,04% and the debt ratio at 78,2% in the quarter. In view of the latest interest rate hike, and prospects of further rate hikes later in the year, Absa says this ratio is set to rise further towards the end of 2008.
The affordability of housing, especially for first-time buyers in the low– and middle-income categories, will be further adversely influenced by the latest rate hike.
Consumers’ spending power has been severely eroded by higher food and fuel prices over the past number of months. In addition to this, the cumulative rise of 500 basis points in interest rates since mid-2006 has caused the average monthly repayment on a mortgage loan to have risen by 35,6%.
Against this background, levels of activity and price growth in the residential property market are expected to slow down further in the second half of the year and into 2009.
In real terms, Absa forecasts house prices to drop for the first time this year since 1999. Mortgage advances growth, currently at 21,9% year-on-year after declining from almost 31% in October 2006, is forecast to continue to slow down towards the end of the year and into 2009 on the back of the interest rate cycle, the impact of the National Credit Act, and a slowing housing market.
Article courtesy www.rodneyhayter.com
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Alternative materials make building sense |
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Building packages that offer buyers homes built with alternatives to traditional bricks and mortar are gaining popularity because of cost savings.
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Chris van der Nest, manager of the local Homenet Trio office in Grootbrak on the Garden Route, says alternative materials limit building costs to around R3 800/sqm depending on inside finishes, as opposed to R4 500 to R5 500/sqm for traditional brick and mortar homes.“
As an example, the so-called Vermont cladding is currently very popular and we work with a developer who offers building packages using this material. New homes built in this manner also offer far better value for money than existing houses,” he says. |
Vermont cladding is a cement fibre product that resembles wood and offers superior insulation – an important consideration in the current climate of power scarcity, Van der Nest adds. “The finished product is very attractive and finds favour among buyers. The building packages are also popular among investors since lower building costs mean greater rental returns or smaller bonds.”
About 80% of investment properties in the area are rented out on a permanent basis while the remainder are used or let as holiday homes, he says. Indeed, Grootbrak is still a prime holiday destination. It is situated between George and Mossel Bay and is 10km away from the George airport.
Homenet Trio is currently marketing vacant stands in the area at prices of between R300 000 and R1m, with the option of drawing up building plans according to the buyer’s specifications and arranging with the developer to build a home using Vermont cladding.
Van der Nest adds that prices for traditionally-built homes in Grootbrak currently range between R650 000 for basic two-bedroom units and R6,5m for upmarket homes on smallholdings. Prices for vacant smallholdings of between 3ha and 6,5ha start at around R1,7m. Most homes sold locally fall into the R860 000 to R950 000 price range.
Picture shows two bedroom, 2two bathroom and loft, 145m² home was completed four months ago using Vermont cladding and the total cost stand included was R 790 000
article courtesy www.rodneyhayter.com
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Building Blunders |
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I often joke that we could write a delightfully humorous book based on true life short stories of building and renovating nightmares. Almost everyone that you speak to has such a tale to tell and little seems to be done about the level of service in the building industry. One such story I was told the other day was that of a very well known builder who for a short time became a popular South African TV personality. This builder (who shall remain nameless) quoted on a renovation job that was estimated to cost in the region of R150 000. This money was taken out of the homeowner’s mortgage bond. The job was started, but midway the builder took on another project and used the surplus monies of about R70 000 to fund a new project. Not only was the first job never completed, but the builder now does not have access to any funds to complete the job. The homeowners are now out of pocket to the tune of R70 000, with an unfinished renovation to their home, and no idea of what to do next! I heard a wonderful description of such builders: ‘bakkie builders’.
Building or renovating your home requires a considerable investment, not only in money but also in time. There are distinct advantages and disadvantages involved along the way. Make sure you are ready to tackle such a huge project and remember with careful planning you cannot go wrong. It is more expensive per square metre to build than to buy. Building costs could set you back over R4 000m² - a vast sum of money if you go about it the wrong way.
Choosing a reputable contractor is key to successful building - surround yourself with qualified professionals from day one. Firstly, confirm that the builder is registered with the National Home Builders’ Registration Council (NHBRC). The registered builder will issue a standard Home Builder Warranty to the new homebuyer. The NHBRC warranty scheme only applies to new, bondable homes, built by home builders registered with the NHBRC. It does not cover alterations and additions. Another good way of finding a builder is word of mouth - make sure you get references on past work done - a few previous jobs, not just the last one. If you are using the services of an architect, they will also recommend builders that they have used on previous jobs - again, get references. Your bank may specify that you use a registered NHBRC member as part of the loan agreement. Always get at least 3 comparative quotes from 3 reputable builders. Beware of a quotation that is extremely low - this could lead to inferior materials and products being used. Once you have decided which contractor to use, get a written agreement drawn up - (this could be your only legal foot to stand on if he runs off with your money). In this agreement stipulate everything that was quoted, the payment plan for the job and you can also have a penalty clause in place due to delays by the builder. It is always a good idea to keep a reasonable amount back on completion until you have sorted out your snag list with the builder. The same will apply if you are dealing with a project manager.
Golden rules for successful building
The first rule when building your own home is to only build what you can afford - and remember that you will need additional funds in reserve for any unexpected problems that arise.
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Keep the lines of communication open between you and the person in charge of the project, and talk only to him or her - telling subcontractors to make changes midway will only make for problems within the team and cause confusion about what you really want.
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Make sure you understand every step and don’t let jargon put you off. If at any time you are unsure, ask. Equally, if you are unhappy about something, say so immediately - it will be easier and cheaper to sort out sooner rather than later.
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Any changes agreed to throughout the course of the project should be put in writing as an addendum to the contract. Be honest: if your financial situation changes, talk to your builder. He may be able to suggest some money saving alternatives.
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If you have a problem that cannot be sorted out, seek advice from the appropriate association or from a lawyer.
- If you choose to use an architect and employ them as your project manager you will have less stress when it comes to the building process, as your project manager will take care of almost everything. The same rule applies to hiring your project manager as does to hiring your builder: get references!
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| Herbs for Souper Soups |
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One of the best things about winter is that it is the season for soup.
Soup is the most improvisation-friendly food in the world and it can also be a cure for the common cold. In the 12th century the great physician and philosopher Maimonides prescribed herbal baths and chicken soup as remedies for the common cold.
More than 800 years later, researchers for the New England Journal of Medicine found that chicken soup was indeed a mild antibiotic and decongestant.
Bouquet Garni’s Di-Di Hoffman says that when treating acute illnesses herbalists will often recommend a cleansing diet. This usually entails taking freshly pressed fruit and vegetable juices or vegetable broths (soups.)
"So there is no doubt about the health benefits of homemade soup filled with fresh ingredients. By adding herbs and spices you can bring delicacy, harmony, and complexity to your soup," he says. Di-Di says that if you grow or buy only one soup herb or spice you should buy parsley, as it’s such an excellent garnish for all your soups. "If you can buy three include chives, for the same reason, and lovage because it makes an excellent stock for all soups. "If you can buy five include savory and thyme, because they are good all-rounders and make nice additions to bouquets garni." The list can be extended to 10 by adding basil, bay leaf, celery, cloves and marjoram. Di-Di’s wife, Teresa, has drawn up a list of 36 herbs and spices that can be used in soup. She uses the classification system developed for making bouquets garni.
The fusion soup herbs which help the flavours mingle, are bay leaf, chervil, chives, marjoram, and parsley.
The mild soup herbs are anise, basil, borage, dill, fennel, celery, coriander, and salad burnet. The robust soup herbs are garlic, ginger, hyssop, lemon balm, lovage, mint, oregano, savory, sorrel, tarragon, and thyme. They should be used more sparingly.
Other soup flavourings can include allspice, cardamom, cayenne, cloves, coriander seeds, cumin, juniper, mace, nutmeg, paprika, rosemary, sage, and turmeric. If fresh herbs are not available, dried herbs will do, but Di-Di warns that the flavour of these is much stronger than fresh herbs, so they should be used sparingly.
His other tip is to avoid using too many herbs at a time if you are not familiar with the taste and aromas of herbs. Try to limit yourself to about three or four at any given time.
One of the Hoffman family favourites is Hearty Vegetable soup:
• 2 medium zucchini, thinly sliced
• 2 medium carrots, sliced
• 10 mushrooms, sliced
• 2 stalks celery, sliced
• 1 can corn, drained
• 1 potato, peeled, cut into chunks
• 225g green beans cut in half
• 4 cups vegetable broth
• 3 cups canned crushed tomatoes, drained
• ½ cup fresh parsley, chopped
• ½ cup fresh cilantro, chopped
• 1 tablespoon chopped garlic
• ¼ cup fresh basil, chopped
• ¼ cup fresh oregano, chopped
• Salt and freshly ground black pepper
In a heavy large soup pot combine zucchini, carrots, mushrooms, celery, corn, potatoes and green beans. Add vegetable broth, tomatoes, parsley, cilantro, garlic, basil and oregano. Bring the mixture to boil.
Cover and simmer for 20 minutes or until vegetables are tender. Take 3 cups of vegetables from pot and ¼ cup cooking liquid and liquidize. Stir puree into rest of soup and season to taste. Heat through and serve.
• Di-Di Hoffman is the owner of Bouquet Garni Nursery – South Africa’s Top Potted Herb Growers and Marketers. Visit his website www.herb.co.za for access to ‘Easy to Make Nutritious Soups’ which includes 55 basic soup recipes and 260 variations.
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