Issue 8  -  May 2008

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  Residential property market slumps
 

The FNB Residential Property Barometer for the first quarter 2008 showed a continuing decline in activity levels in the major South African metropolitan areas, as anticipated by property professionals around the country.  Having slumped from 5.09 in the last quarter of 2007 to 4.96 in the first quarter of 2008, the national activity level rating, measured on a scale of 1 to 10, is the lowest on record since the introduction of the quarterly survey in 2003. The highest activity level on record was 7.66 achieved in the first quarter of 2004.   

The average time that a house is on the market has gone up from 11 weeks 2 days in the previous quarter, with 82% of sellers accepting a lower-than-asking price, to 12 weeks 4 days during the first quarter of 2008, with 83% of sellers closing their sales at a lower price. First-time buyers declined from 17% of the total market in the previous quarter to 14% in the first quarter of 2008.

Contributing factors and outlook

“The results clearly reflect that the property market is now experiencing the fall-out caused by a number of factors which have a major impact on the economy as a whole, namely successive increases in the interest rate, rising inflation eroding disposable income, decreased consumer confidence as a result of the economic downturn, a certain degree of political uncertainty following the ANC conference at Polokwane in December and, most recently, the electricity supply shortage,” says John Smyth, CEO of the MultiNet Property Group.

“That said, however, the various market segments are impacted to a greater or lesser extent. For example, the inland regions of Gauteng are still recording higher activity levels than the coastal market. This can be attributed to the fact that the inland Gauteng property purchases are mainly primary residential properties, whereas the coastal market has traditionally comprised secondary residential properties and the latter is now reflecting the impact of the recent successive interest hikes.”

Furthermore, it is to be expected that the steady rise in consumer price inflation will have a major impact on the lower income end of the residential market, with essential expenditure on food and transportation costs increasing dramatically. On the other hand, the top end of the market reflects marked activity, according to the FNB Residential Property Barometer, with a larger percentage of sellers entering the market with a view to emigrating than during the previous quarter. It is too soon to predict to what degree this trend may continue, or to what extent it will impact the upper levels of the residential property market. With a declining trend in property purchases, the market may be heading for an upsurge in the rental segment, possibly adding further impetus to the buy-to-let scenario. This segment rose from 11% in the previous quarter to 13% in the first quarter of 2008. With the electricity supply shortage more than likely curbing activity in the residential building sector, we can expect to see general property renovations and upgrades, with a livelier trend towards upward mobility within the more contained supply-and-demand parameters.

With FNB’s Residential Property Barometer having slumped to its lowest ever quarterly level, what does the immediate future hold in store for the property market? It all depends on developments on the interest rate front – another hike would most definitely have a negative impact, whereas any positive indications for a decline in interest rates can be expected to start delivering positive property market returns towards the end of 2008.
  Make your money work for you
 

Now is really the time to tighten those purse strings with increased food prices, petrol hikes and proposed electricity tariff increases - but it may also be the right time for a long term saving’s plan.

The largest expense for most property owners is the monthly repayment on their home loan – with eight interest rate hikes since 2006 this figure keeps on growing. By cutting corners on luxuries and putting those extra funds into your home loan you could save hundreds of thousands of rands and reduce the period of your home loan by as much as 33 months.

Example of additional payments:
1. Home loan Amount  R500 000-00
  Current Interest rate    15%
  Repayment period   240 months
  Monthly bond repayment R6583-95
  Total debt incl interest  R1 580 147-50
     
By paying an additional R180-00 a month you could make the below saving
     
 

New monthly bond repayment

 R6 763-95
  Repayment period      207 months
  Total new debt incl interest    R1 403 283-50
     
A saving of R176 863-97 and repayment period reduced by 33 months.
     
2.

Home loan Amount

  R1 000 000-00
  Current Interest rate 15%
  Repayment period     240 months
  Monthly bond repayment R13 167-90
  Total debt incl interest R3 160 295-00
     
By paying an additional R300-00 a month you could make the below saving
 

New monthly bond repayment

 R13 467-90
  Repayment period       212 months
  Total new debt incl interest R2 854 505-80
     
A saving of R305 789-15 and repayment period reduced by 28 months.

 
Use the Amortization Calculator on www.multinetmortgages.com to work out your savings plan.
For advice on debt consolidation contact Multinet Mortgages on 0861 54 54 44
 

  Decorating for a warm winter
 

Most of us plan for winter by bringing out all our winter woollies, jerseys and jackets that have been hanging around in a spare cupboard, or we rush off to the shops to buy new winter outfits. We have a different look and style for each season, so why not carry this over into decorating our homes. On cold winter nights we need a space that will offer comfort and warmth. Let’s take a look at how we can create this in our homes.

Think fire-hued tones of orange, terracotta, gold and red to bring instant warmth to a room. If you find these colours will only make a room darker, use softer tones of these colours. This can be done with your accessories if you are not in a position to repaint. The best way to warm up a room is obviously with a real fire. Nothing beats curling up in front of a fire, day or night. If you do not have a fireplace, you could create warmth and intimacy by lighting some candles - this is a great idea for the bathroom too.

Luxurious layers of warmth can be introduced to a living area by adding stylish throws to your living area - throwing them over a side of the couch will invite guests and family to snuggle up. Changing your scatter cushions on your couches can give the room instant wamrth - discover a wide variety of suede, leather and velvet cushions in wonderful shades of winter colours. You many also consider changing a rug or two in the house with something a bit more shaggy and snug that your feet will just sink into. With the change of season you could also consider that it is not just about accessories but about the whole room - why not introduce a new colour to your walls, creating the perfect backdrop for a cosy look and feel. You can also get this backdrop without painting, by using a piece of fabric or a throw as a wall hanging.

South Africans love to socialise and we can still do this during the winter season, but the key is to make sure all your guests are warm and comfortable. Patio heaters are great for outdoors, but can also be brought indoors. (A word of warning: take safety precautions.) Not only is a freestanding ceramic fireplace excellent for heat distribution, but it also looks great. These magnificent works of art are smokeless and should last a lifetime.

  Damage to Sectional Title property
 
Be aware of exactly what insurance cover is held by your Body Corporate in a Sectional Title Scheme so you do not end up liable for damages.

It is also important to know the value of the insurance cover to ensure it is sufficient to protect you from loss or damage to common property or personal injury that may arise, advises Brett Nicholson of Shepstone & Wylie Attorneys.
Nicholson explains that the Sectional Title Act makes it clear that it is the responsibility of the Body Corporate to insure the building and all improvements to the common property within the scheme to their full replacement value, against any such risks and damages as may be prescribed.

In addition, all buildings and common property must be insured against any other risks identified through special resolution by the owners within the scheme. The Body Corporate will then recover the insurance premiums required from the levy fund paid by all the owners.
This insurance should cover damages such as:
Fire, lightning, malicious acts, storms, floods, earthquake, bursting pipes, impact of any buildings by a motor vehicle or other object, housebreaking
and loss of rent due to any of the aforementioned.
"This is by no means a complete list and only provides an indication of what type of damage is generally covered by the insurance taken out by a scheme", adds Nicholson.

Furthermore, the body corporate should take all reasonable steps to insure all the owners within the scheme and to keep them insured against any liability, which may arise in respect of:

Death, bodily injury or illness; and
Loss of property or damage to property

These liabilities may arise as a direct result of or in connection with the common property.
The minimum legal value prescribed for a Body Corporate is R100 000, but this amount is only a minimum value and can, and often should be, increased by the owners in a general meeting, adds Nicholson.
He stresses the importance of owners making enquiries regarding the quality and value of the insurance held by their scheme and not just to presume that this has been adequately provided for.
article courtesy www.rodneyhayter.com
 
  Choosing a tree for a small property
 
 

Choosing the most suitable trees for your property is probably one of the most important gardening decisions you will ever make. When it comes to shrubs, it is much easier to remedy a poor choice or badly positioned plant. On the other hand, investing in a tree means that you may only realise five years later that it is inappropriate for your garden or that you have positioned it incorrectly. In a big garden this may cause you some annoyance, but in a garden where there is only enough space for one or two trees, this can be a real disaster.

So, before choosing a tree, ask yourself what purpose you want the tree to fulfil in terms of the overall garden design. Do you need to screen an unpleasant view or focus the eye on a more attractive distant view? Do you want a tree for the kids to climb or in which you can build a swing or a tree house? Do you need shade in summer? Or do you just want to find the ideal tree for the delight of your soul?

Deciduous or evergreen?

Evergreens can be a real liability in a small garden, as the shade they cast in winter can make the garden dark and dank and make your house feel unnecessarily cold. Generally speaking, evergreens should not be planted on the northern or eastern aspect of the house, as they will deprive you of much needed winter sun. However, they make great screeners and windbreaks.

Here are a few specimens that are suitable for planting in a small garden:

Camellia japonica varieties:

Glossy green foliage, winter and early spring flowering, tolerate cold gardens, relatively slow growing, like acid soil and need regular watering in dry weather. My favourite varieties are Debutante (pink flowers), Elegans (rose pink), Kramers supreme (double red), Can Can (pink edged with red), Nobilissima (white), Shiro Chan (white).

Conifers:

Thuja orientalis ‘Golden Rocket’

Columnar shape and fine yellow colour

Juniperus scopularum ‘Skyrocket’

This very slim pencil-shaped cultivar may reach 7 metres in height. It has blue-grey foliage

Chamaecyparis lawsonia

‘Columnaris Glauca’ is also a tall conifer, but has a very attractive, wider, shape.

There are also many wonderful varieties of palms that are worth considering.

Many varieties of deciduous trees are suitable for a small garden. Some of the best are the ornamental fruit tree varieties. My most favourite is the Prunus serrulata ‘Kanzan’. It flowers spectacularly in late spring with large double pink flowering clusters that last for at least a month and it has wonderful autumn foliage that makes an excellent mulch. Being a fruit tree variety, this tree can be shaped to suit your preference. It is really breath-taking when in flower and is suitable for small children to climb to their hearts’ content.

The ‘Kanzan’ variety seems to do particularly well in the Johannesburg area.

‘Shirofugen’ has white blossoms and seems to prefer a colder climate to give its best performance, so it will do well on the east and west rand. Another Prunus variety is ‘Pollardi’. It has lovely pink flowers and rich red summer foliage.

For cool gardens the Acers (maples) with their decorative foliage and lovely autumn colours are a good choice. Best varieties are Acer buergerianum, Acer palmatum.

Ginkgo biloba is slow growing and slim, but will eventually grow to a tall tree has lovely yellow foliage in winter.

For those of you who would like to plant an indigenous tree, Dais cotinifolia is a slim tree with greyish green leaves and pink pompom-like flowers. Combretum kraussi is a fast growing climber and has attractive wine red autumn colouring.

Preparation and position is vitally important

All trees should be planted in a large, well-prepared hole with added superphosphate and compost. In windy areas they may need to be staked until they are well rooted. Remember to allow enough space in all directions for trees to grow and spread. They should always be planted at least 1,5 metres away from walls to allow for proper growth and symmetrical development.

When to plant?

In general, late summer or early autumn is the best planting time, as the moist, warm soil allows the roots to grow, while the dropping night temperatures prevent any rapid growth. Then your tree will already be well rooted by the time spring arrives and encourages strong growth spurt.

However, I generally select my camellias in winter when they are in flower, so that I can be sure of getting the variety that I really want.