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Coastal areas to recover first

09 Oct 2009 Property24
Housing markets of coastal cities are likely to bounce back sooner than that of their inland counterparts, latest data from industry players suggest.The FNB Residential Property Barometer released earlier this week shows that confidence or activity levels (measured mainly by show house attendances) improved more dramatically in Cape Town, Durban, Port Elizabeth and East London than in Johannesburg and Pretoria in third quarter 2009. In fact, activity levels in all four coastal cities are now at two-year highs.FNB's latest quarterly survey was undertaken in mid-August, following the most recent rate cut by the SA Reserve Bank, which totals 500 basis points since December 2008.The barometer measures the perceptions of market conditions among a large sample of estate agents across all major cities on a scale of one to ten. Durban recorded the highest activity levels in the third quarter with a score of 5.86, followed by Cape Town, Port Elizabeth and East London, all with scores of 5.82. Tshwane (Pretoria) and Johannesburg lagged at confidence levels of 5.76 and 5.47 respectively.FNB property strategist John Loos says coastal residents are clearly now more optimistic about property market prospects than their inland counterparts. However, Loos says although the rebound of coastal housing markets generally appear to be stronger than that of inland areas, there are certain sub-regions of Greater Johannesburg and Pretoria where a recovery is already well under way. For instance, Johannesburg's East Rand suburbs of Benoni, Boksburg and Brakpan recorded average price increases of 2,7% in the second quarter y-o-y while Nigel and Springs saw prices rise 3% over the same time. Latest housing data from Lightstone support the notion that coastal housing markets may recover at a faster pace than that of their inland counterparts. According to Lightstone's housing index for September 2009, Port Elizabeth in the Eastern Cape is leading the national housing recovery with prices already up 4.3%. The housing markets of Durban and Cape Town followed with price declines of -1.1%, and -1.5% respectively while Johannesburg and Tshwane lagged with drops of -2% and -4.1%. – Joan Muller

Eskom chairman to brief govt on tarrifs

9 October 2009
By Evan Pickworth
Chairman of Eskom, Bobby Godsell, said on Friday he was in the process of briefing government on the proposed 45%-66% increases in electricity tariffs over three years, but could not say if they would support it.
Speaking at the Steel and Engineering Industrial Federation of SA presidential breakfast at the Johannesburg Country Club, he said Eskom had delivered a 93-page document to government and government would make its views clear on the matter.
He said further meetings were planned for the weekend, but emphasised throughout his speech that the current tariff structure would not support South Africa's growth needs going forward, nor would it entice investors to open their chequebooks.
He strongly recommended SA start looking at alternative sources of power, especially nuclear and solar, with the private sector taking ownership.
He also called for 30% of local generation being private, but said this had not been possible due to the fact that electricity in South Africa was sold at a half to two-thirds of cost.
He noted the high costs of reliance on coal, with Eskom's future plans requiring 16 new coalmines.
Godsell said that the first phase of Eskom's build programme was on track and that 18 000 megawatts was planned to be added to current production of just 40 000MW.
But he also highlighted the gargantuan nature of the R385 billion capex programme, being four times the size of Gautrain and six times the expenditure on 2010.
While acknowledging he did not have the most popular job in the country, he said it was time to focus on the hard realities, make tough choices and stop all the "Eskom bashing", which would not achieve anything.
He noted that Eskom was not turning off people's power at the moment if that had been done after May, it was by City Power.
"If we don't address the tariff, we will not have people coming in," he said, when referring to the need to raise capital and for private investors to get involved.
He said that Eskom's borrowing requirement this year was R50 billion, but he again highlighted that for it to be an exciting "cash cow" for investors, prices needed to exceed costs going forward.
Godsell said coal stocks were now at 42 days average from being at 4-12 days during the recent power crisis, and said Eskom had to take the blame for not acting sooner on that score.
"Eskom got it wrong. I don't think we'll get it wrong again," he said.
He also pointed to structural problems, like the fact that had not been new power generation in SA for 20 years, or on scale plans for 30 years.
He said any subsidisation done for consumption going forward needed to be "completely transparent", with 99% of South Africans probably accepting that some form of subsidisation for the poor was needed.
He said Eskom was "not in great shape" to subsidise any projects at the moment.
He said it was not a viable entity if it ran losses of three billion rand a year, like it is currently. But he said the company was already starting to cut back on operating costs (R22 billion), but would face high salary charges as it would be hiring highly skilled people.
He said due to the fact that it was so cheap, electricity usage in SA had been wasteful in the past and consumers should also think of ways to save, like getting a solar geyser (40% saving), changing to better light bulbs (20%) or even getting teenagers to turn lights off.
On the big picture, Godsell said Eskom planned 52 000 extra megawatts in 25-30 years at a projected 6% growth rate.
But he said he felt this "could be high". He said, while difficult, the national debate had to include assumptions on the growth rate and electricity intensity.
He noted that Japan, for example, had 120 000MW at its disposable and SA only 40,000MW, but SA had very high intensity on its mines and particularly in the smelting process.
He said SA should be aiming to move from developing to developed economy status in 25 years.
"Clearly we need to very significantly increase electricity supply," he emphasised.
On a positive note, he said that Eskom was now being vetted on its maintenance externally and had just received a "big green tick".
Source: I-Net Bridge

Story From : http://www.absa.co.za/absacoza/content.jsp?/Home/News-&-Market-Information/News/Top-Stories&artNo=1304815

Petrol breaks through R10

 

The retail price of petrol will increase by between 75 to 81c a litre next week, says the DME.

Petrol breaks through R10

Is it time to fix mortgage rates?

Is it time to fix mortgage rates?
2008/06/27

After ten consecutive interest rate hikes, homeowners are finding it difficult to meet their repayments. Many are considering fixing their rates to hedge against future hikes. Bond Finance expert Ian Wason says one should consider all the options before going out and looking for a fixed mortgage rate.
According to Wason, homeowners have two options: hang on, or get out of the property market altogether. If you have cut your budget again and again and can't seem to make ends meet you should consider selling some assets, as one thing is for sure, your situation will get worse as interest rates, oil and food prices continue to rise.
"Debt consolidation, remortgaging and reducing other monthly expenses should be looked at before people decide to fix their rates," says Wason. "We are seeing a lot of opinions as to where interest rates are going at the moment. These are just opinions, as nobody really knows. We are seeing a lot of 'false horizons' as to where of the top of the interest rate cycle is, purely because we have no idea where oil and food prices will go, and this is now what is causing the inflationary pressure, not the demand side driven by easy credit. "
"It was the combination of negative equity and a stalling economy that sent the UK property market down 35% in the early nineties. I believe the problems in SA at the moment are on a similar scale," he says.
Homeowners must not forget that the chances are they could rent the same property for less than half of what they are paying in mortgage repayments on a 100% mortgage.
Don't follow the trend if you can counter the knock
"While rates are rising at a speed that is crippling, it is important to remember that you don't have to stick with the rate that you got at the start of your current mortgage," says Wason. "So, after you have had your mortgage for a while you may be able to negotiate a better interest rate because you could be a far less risky client to the bank. If you fix your rate now, you may be negating the benefits that a variable rate would allow in the long term. It is important that you shop around for a better rate on your current mortgage before joining the wave of fixed rate enthusiasts."
In addition to this, he says the individual should also do a complete analysis of their expenses and try to reduce their insurance, bank and medical aid costs.
Remortgaging could be a better option, so shop around
Wason argues that while a fixed rate may be worth your while for the next 18 months, it is important to remember that your mortgage is going to last at least 20 years. In that time, you may well be able to negotiate a better rate on your bond as your salary increases or your reduced risk profile starts to take effect.
"South Africans need to get far more dedicated to shopping around for a better rate – they would be surprised what they could be saving themselves."
A Fixed rate could just cost you
He adds that going out and seeking a fixed rate mortgage can be costly because nobody knows how long the rates rise is going to continue. "While the mood at the moment seems to suggest that we should all go out and fix our mortgage rates, it is important to view this in light of your own situation."
"If you could be getting a better rate on a variable bond, you are better off trying to negotiate that. Don't simply call up and ask what fixed rate the bank could offer you."
Looking at the numbers
For a R500,001 mortgage, where your loan to value is less than 80%, you can currently fix your rate for the following rates:

For the same mortgage on a variable rate you should be getting a rate of Prime less 2% = 14% (with an interest rise of 1% scheduled in on Thursday) therefore your repayments are R6,217.63.
Another option would be SA Homeloans' interest only rate of 13.5%, giving you a repayment of R5,995. This is the lowest monthly commitment, but remember that you are not paying off any capital.
What should you do?
Wason says it is important to remember that everyone's situation is different. No option is best for everyone so you need to do your own budget, establish what your priorities are and take the mortgage that best suits your situation. Also remember that you can always change your mortgage product again, as you may decide to get an interest only mortgage, ride our these stormy times and switch back to a capital and repayment mortgage once interest rates start coming down or when you can afford to pay more in.
For more information contact ian@bondbusters.co.za. Click here to visit the website.

Is it time to fix mortgage rates?

Banks 'stand up' for borrowers

Banks 'stand up' for borrowers
2008/06/27

Banks have an important role to play not only in getting people into houses, but also in keeping them there, which is why they have been prepared to make some "tough calls" lately that could quite possibly lose them a substantial amount of new business.
Such calls include the controversial decision to re-introduce the deposit requirement for home loan borrowers.
Following on the heels of 10 consecutive interest rate rises and the introduction of the National Credit Act (NCA), the deposit requirement is likely to further reduce the number of potential buyers able to qualify for a home loan, "but is still considered necessary now to ensure that our customers are not exposed to over-indebtedness", he says.
Speaking at the Homenet real estate group's national conference recently, Luthando Vutula, the new head of home loans at Absa, said the bank believed that by doing this, it would assist customers to make better buying decisions because they would have to contribute financially themselves if they wished to go ahead with a purchase.
"And while we all breathed a sigh of relief earlier this month when the Reserve Bank confirmed a 50 basis points increase in the interest rate, we can't afford to assume this is the last increase we're going to see this year. As a responsible lender, we also need to ensure that customers buying homes today have enough room in their budgets to weather the storm of possible future interest rate hikes."
Looking ahead, he told conference delegates the next two to three years would see all players in the real estate industry having to innovate new ways of making money "while protecting our customers from short-term impacts that could derail their long-term investments".
Meanwhile, he said, now was the time for serious property investors to start shopping around. "The best time to buy will be in 2009," he predicted.
"Patient investors will then be spoiled for choice and will be able to build a portfolio that will yield good results in years to come."
In addition, he said that buying a home remained the single most important purchase any individual could make.
"While the dynamics of the real estate sector may have changed since the boom years, a home remains a good investment that sets the foundation for wealth generation. At the moment, buyers may just have to adjust their expectations and start with a smaller home to ensure future affordability. Then when the cycle turns they will be in a position to upgrade to something closer to their original aspirations."
For more information contact Martin Schultheiss on 031 266 9850 or click here to visit the website.

Banks 'stand up' for borrowers

Pitfalls that can delay transfer

Pitfalls that can delay transfer
2008/06/13

Sellers should be aware of pitfalls and hidden costs which can delay the registration of the transfer of a property.
Bev Nelson of Shepstone & Wylie Attorneys property department explains that if the property is sold with the assistance of an estate agent then the agent will usually provide a general sale agreement, which is required by law. "However, if there is no agent involved, or a specialized agreement is necessary, this will need to be drawn up by an attorney at a cost to the seller, unless the parties agree otherwise," she adds. Using an estate agent also carries estate agent's commission which is normally paid by the seller.
Sellers must be aware of their responsibilities once the agreement is signed and a conveyancer is appointed, advises Nelson. These include:
• The payment of all rates up to the date of transfer If the property is conventional,
• If the property is sectional title, all levies need to be paid up to the date of transfer.
• The cost of an electrical compliance certificate certifying that the property is reasonably safe, plus the cost of any repairs necessary in order for the certificate to be issued. This certificate is a legal requirement.
• The cost of an entomologist's certificate certifying that the property is free from wood-destroying insects (not white ants), plus the cost of any procedures (e.g. tents) necessary in order for the certificate to be issued. This is not a legal requirement however it is usually required by bondholders.
If the property is bonded at the time of selling then that mortgage bond will need to be cancelled simultaneously with the transfer of the property to the buyer. The bondholder will require a guarantee from the conveyancer that any balance owing on the bond will be satisfied on registration. "Therefore the balance owing on the bond will be settled out of the purchase price by the conveyancer before paying the balance of the purchase price to the seller. The seller is responsible for the costs of the cancellation of the bond," says Nelson.
If the property was not bonded then the seller should have the title deed. If the title deed has been lost or destroyed, application can be made to the deeds office for a certified copy. Once the Registrar is satisfied that the deed cannot be found he will issue a certified copy of the title deed which will, for all purposes, be treated as if it were the original. The seller is responsible for the cost of obtaining the copy.
Nelson warns that the seller should be careful to include an occupational rental clause in their sale agreement, as if the transfer is delayed and the buyer moves in, without this clause there will be no occupational rent payable. "Especially since most sale agreements include a clause that the agreement cannot be varied unless it is in writing and signed by both parties."
The seller should also note that the general position is that they will only be paid the purchase price and the risk of the property will only pass to the buyer, on registration of the transfer. However, this will be subject to the terms of the sale agreement, adds Nelson.

Pitfalls that can delay transfer