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House Price growth in single digit territory; close to inflation.


The key data release in June was the SARB (Reserve Bank) Quarterly Bulletin, which confirmed our expectation that real household disposable income growth had slowed further in the 1st quarter from a prior quarter’s 2.4% quarter-on-quarter annualised rate to 2.2%. This has a bearing on residential buyer purchasing power growth, and largely explains the recent steady deterioration in Consumer Confidence in recent quarters.

In addition, interest rates continue to move sideways, with prime rate having remained at 8.5% since the 3rd quarter of last year., thus offering no additional demand stimulus since then. The combined impact of no interest rate cutting as of late and slowing disposable income growth could have constraininge implications in terms of growth in residential demand in the near term, with economic growth looking set to battle to exceed 2% for 2013 as a whole.

The current level of interest rates set by the SARB is at multi-decade lows, and indeed the stability of interest rates at these low levels has helped to gradually strengthen residential demand through 2012 and early-2013. But it is questionable whether this residential demand strengthening can continue at a time of clear economic weakness, and where we have already seen a steady slowing in growth in the area of real consumer demand as a result.

For 2013 as a whole, therefore, a weak economy and resultant weakened disposable income growth leads to the ongoing expectation that house price growth will continue to remain largely in single-digit territory in the near term, due to potential pressure on demand, not far outpacing consumer price inflation of near to 6%.

Click on title of this blog to download the full report in PDF.

Courtesy of The FNB Property Barometer- June 2013 House Price Index by John Loos

All banks require 90 days written notice for cancellation of an existing bond. Without it, you can be charged penalty interest, or you may have to wait out the notice period (which can also delay transfer). To avoid this, you can give notice as soon as you decide to sell – if you don’t sell within 90 days, the notice lapses and has no further effect.

Gareth Bailey, Tyson Properties Umhlanga

MoneyWeb (Phakamisa Ndzamela) 06 July 2011 20:12)

First National Bank is seriously evaluating whether lending at prime is still a viable option for Home Loans and may soon add a percent to the cost of its borrowing rate for most new customers seeking new home loans and to existing customers wishing to take on further loans.

The rethinking comes as the cost of funding and the rate at which the bank borrows is becoming more expensive for the long term.

“We have to revaluate the rate at which we are offering home loans, partly because of the cost of raising money from the market … we should on average be at prime plus or prime plus 1.5% or 2% …  It is imminent and we have to make the change,” CEO of FNB Home Loans Jan Kleynhans told Moneyweb.

“We believe home loans are still under priced and we believe it’s going to change. We don’t think it’s sustainable at the current levels.”

Asked if FNB was not worried that it would lose customers due to the adjustments in the lending rate for home loans, Kleynhans said:

“There is that risk but if input costs are too high then we have to make do  with those tough decisions and face reality. We have made significant price changes before and the market followed and made the adjustments. We think it will happen again.”

However, a banker from another of the big-four told Moneyweb that they had already repriced at prime-plus.

Kleynhans added that everybody knows about Basel III. In most market segments, consumers need credit first and then looking at the rate offered by the bank. The demand for credit is a bigger issue than what the cost of credit is, from a consumer perspective, and that’s why we think it’s time to make this next adjustment.”

To read the full article on Moneyweb, visit this link

Change entities and save Capital Gains Tax on your primary residence
Change ownership of your primary residence from legal entity to natural person before 31 December 2011 and save Capital Gains Tax on the first R1,500,000 when you eventually sell.
Would you benefit from the Tax exemption offered by SARS until the end of the year?
This limited period exemption is available for the transfer of a property from a Trust, Company or Close Corporation to a natural person but these transfers must be registered by 31 December 2011.

Why would you want to take advantage of this offer from SARS?
Because a Trust, Company or Close Corporation does not qualify for the exclusion of the first R1 500 000 for the calculation of Capital Gains Tax when you sell the property, and a natural person does.

So…. You will be exempt from paying transfer duty and capital gains tax on this transaction and, when you sell your property, you will be entitled to exclude the first R1 500 000 for the calculation of your capital gains tax liability.
There are a few requirements that need to be met in order for this exemption to apply so please contact Natasya from AMC Hunter Attorneys on 082 907 0711 to discuss.

Don’t leave it to the last minute. There will probably be a plethora of transfers stampeding SARS and the Deeds Office towards the end of the year which will mean some of them won’t register in time.

Please contact Natasya from AMC Hunter Attorneys for a quotation and advice on this offer.
by Adrian Goslett

Reserve Bank Governor, Gill Marcus, announced after the conclusion of today’s Monetary Policy Committee meeting that the interest rate is to remain unchanged at 9%. The rate has remained unchanged since November last year, when it dropped from 9,5% to its current 9%. The fact that the rate has remained unchanged certainly bodes well for the economy’s stability.

While most remain cautiously optimistic about continued economic recovery, there are definite signs of improvement. Aside from the interest rate remaining stable, The South African Chamber of Commerce and Industry’s Business Confidence Index for January 2011, which is at 87.4, indicates a vast improvement from January 2009 (82.4) and 2010 (81.2).

It is anticipated that 2011 will be a fairly flat year for the property market as debt-to-income ratios are still at a relatively high level and as distressed homeowners continue to make use of the various bank programmes to assist them in selling property they can no longer afford. As there is still limited access to finance, rental markets are expected to peak while qualified buyers will be able to make the most of the property investment opportunities that are currently there for the taking, a situation which certainly won’t last forever as interest rate hikes are expected later in the year.


Reduction in Transfer Duty

Transfer Duty: 2010 vs 2011

The transfer duty rates for individuals, trusts, companies and CC’s purchasing property have come down in 2011 as announced by Mr Pravin Gordhan in his 2011 Budget Speech.

This is a welcome relief in the costs associated with purchasing property.

The change in the method of calculation is as follows:

Method of calculation: 2010

R0 – R500,000:  0%
R500,000 – R1000 000: 5% on the value between R500,000 and R1,000 000 plus
R1,000,000 and above: 8% on the value above R1,000,000

Method of calculation: 2011

R 0 – R 600,000,00: 0 %
R 600,000 – R 1,000,000: 3 % of the value between R 600,000,00 and R1,000,000 plus
R 1 000,000 – R 1,500,000: 5 % of the value between R 1,000,000 and R1,500,000 plus
R 1,500,000 and above: 8 % of the value over R 1,500,000,00

Example 1: Purchase price is R1,000,000

In 2010, transfer duty would have been R 25,000.

In 2011, the transfer duty is reduced to R 12,000.

Calculated as follows:

Value between R0 and R600,000 = R0

Value between R 600,000 to R 1,000,000: 3 % of R400,000 = R 12, 000

R0 + R12,000 = R12,000

Example 2: Purchase price is R1,500,000.

In 2010, transfer duty would have been R 65,000.

In 2011, the transfer duty is reduced to R 37,000.

Calculated as follows:

Value between R0 and R600,000 = R0

Value between R 600,000 to R 1,000,000: 3 % of R400,000 = R 12, 000

Value between R1,000,000 and R1,500,000: 5 % of R 500,000,00= R 25,000,00

R0 + R12,000 + R25,000 = R37,000

Gareth Bailey – Tyson Properties Umhlanga


from IOLProperty News by Editor

Durban ratepayers should brace themselves for above-inflation increases in their monthly bills. In the draft budget for 2011/12, municipal manager Michael Sutcliffe announced increases of 6.5 percent for rates, sewerage and refuse removal, 9.5 percent for residential water, 12.5 percent for business water and 22 percent for electricity.

This means that a family living in a house valued at R750 000, with controlled water and electricity usage, will have their total bill increased from the current R1 500 a month to about R1 700 a month from June. The total for a R1m property with slightly high water and electricity use will increase by about R250 to R2 310 a month.

A pensioner in a property valued at R500 000 with low water and electricity consumption will have their bill increased from R440 to just less than R480.

Municipal treasurer Krish Kumar told the Tribune this week he was happy with the increases, which were kept as close to the inflation rate as possible.

He said nothing could have been done about the electricity tariff, which is linked to the increase approved forx Eskom by the National Energy Regulator last year.

Kumar said the 22 percent was provisional and even though it was lower than the Eskom tariff increase, the council was still going to try to reduce it further before the final budget is passed.

“Considering the development challenges we have and the infrastructure and services backlogs we face, I think we have done well with these increases. We could always do more, but we have to look at affordability and what it would mean for ratepayers.

“What I am really happy with is that, unlike the other metros, we are not cutting back on capital spending. We understand the backlogs and challenges we have, and we are pushing a development agenda,” he said.

He added the fact that the municipality had the highest unemployment rate in the country was also a big factor.

Kumar said that various city departments were looking at ways to become more efficient to get “more bang for their bucks”. He particularly praised water and sanitation boss Neil Macleod for the “innovative” things he was doing that were starting to show big financial benefits.

Opposition parties, however, believe more should have been done.

DA economic development committee member Rick Crouch said: “We think that any increase right now is too high because of the extra financial burden placed on people because of the economic downturn. We don’t think these increases are reasonable because they are higher than the cost of living index, which is between 3 and 6 percent. Most of the increases are between 6 and 9 percent in eThekwini’s case.

“We know we are going to have to deal with some increase, but we will be working hard to try and get the increase down to as low as we can.”

Minority Front caucus leader Patrick Pillay agreed.

“We think the increases are very high, especially when it comes to electricity. Even though this is because of what was given to Eskom, the city should have tried to do something and absorb it in some way.

“Grantees, pensioners and the poor are really fighting for survival – and the sad reality is that their incomes can’t pay for all these increases. They are really suffering. This is the year when ratepayers should have been given a tariff increase holiday and should not have been charged because they have been bombarded with the climbing cost of living. We do not support these increases at all,” Pillay said. could remove a massive rates burden from ratepayers. MF caucus leader Patrick Pillay said: “We don’t think that much is being done to ensure unfunded mandates and high government debt are reduced.”

DA councillor Rick Crouch has proposed: “Cut them off”.

Municipal Treasurer Krish Kumar said there were discussions with the provincial and national health departments over the unfunded mandates, as well as good developments in getting money from the national government, instead of having to go through provincial departments when dealing with housing.

Sunday Tribune


The impending implementation of the Consumer Protection Act (CPA) will regulate transactions between suppliers providing goods and or services to consumers in South Africa.

In the sphere of property transactions, it seems that whilst the Act will apply to estate agents, developers and property speculators who market or sell property in the ordinary course of their business, it will not apply to private sellers.

One way in which property buyers, specifically those who purchase property from developers, will benefit from the CPA will be in the way that the Act challenges the ability of sellers to hide behind the voetstoets clause. Historically, the term “buyer beware” was apt in describing the risk buyers assumed when purchasing a property. The property was sold “voetstoets” which means “as is”. This clause protected sellers from the onerous responsibility of providing comprehensive information to the buyer regarding the condition of the property.

If, after moving in, the buyer found that the roof or swimming pool leaked, for example, the buyer would have little or no recourse against the seller for non-disclosure as the seller could simply hide behind the voetstoets clause claiming that the property was sold “as is”. The only exception being if the seller knew about the defects and fraudulently misrepresented the state of the property to the buyer.

Even though most sale agreements will fall outside the application of the CPA, the business and conduct of estate agents, as suppliers of a service will always fall within the ambit of the CPA. Under the new law, there will be a larger responsibility on estate agents to make detailed enquiries regarding the condition of the property and to disclose those defects they are aware of. If not, buyers will have legal recourse and be able to claim compensation.

The CPA also sets out to balance the playing field between savvy suppliers, such as estate agents and developers, and naive consumers. Sole mandates and sale agreements are usually pre-printed standardised agreements incorporating legal jargon. Many consumers do not clearly understand the terms of these agreements and do not feel comfortable at the point of purchase to ask questions or make changes. As a result, they often put pen to paper with few or no changes, sometimes to their detriment.

Under the new Act, estate agents will be obligated to use plain and understandable language in their agreements and ensure that consumers have a clear understanding of the legal implications before signing.

Some of the other implications of the Act include the obligation of suppliers to provide goods and services at fair prices and on fair terms and to provide express notice if any terms of the agreement limit the risk of the supplier or assign risk to the consumer. The rights bestowed by the Act on the consumer include the right to cancel a mandate within 5 days of contracting if it was procured by the agent via direct marketing methods and the right to return defective goods or property (hence the anticipated conflict with voetstoets).

I think that the CPA is a positive step forward in that it promotes transparency and helps to protect consumers from exploitation and unfair marketing and business practices.

The implication of the Act is still subject to interpretation and will only become concretised once the courts start setting precedents by ruling on matters under the new law.

Gareth Bailey – Tyson Properties Umhlanga



Well-known for its superb luxury hotels and holiday accommodation, first world shopping centres and exotic Mediterranean, Asian, Middle Eastern and African restaurants, Umhlanga offers a vibrant night life and plethora of holiday, dining and entertainment experiences, with the Sibaya Casino as one of the area’s main attractions.

Just off the coastline, on land that once formed part of Umhlanga’s undulating sugarcane landscape, Tongaat Hulett Developments built an exclusive residential estate, which, to date, has outperformed most of the other prime developments in and around KwaZulu-Natal.

Situated just off the N2/M4 on the coastline of Umhlanga, the first stage of the development, known as Izinga Ridge, commenced in 2005 and comprises four gated village estates. “They are almost completely developed and offer buyers an exciting mix of properties, including sectional title units, duets and freestanding houses, with a selection of panoramic sea views,” comments Gareth Bailey, Broker/Owner of RE/MAX Address, whose agency has been accredited to market the development.

Building sizes start from 260m2 for a sectional title unit to 310m2 upward for a duet and 580m2 upward for a freestanding house with land sizes ranging between 850m2 for a duet to 1,100m2 upward for freestanding houses. Sectional title units are priced from R2,8-million with duets reaching R3,5-million upward and freestanding houses priced from R5,7-million upward. Plot sizes range between 700m2 and 1 600m2 and are priced from R770 000 to R1,4-million.

The second stage of the development, known as Izinga suburb, commenced in 2008 and forms part of a potential 2000-unit project, which will form the residential suburb around Izinga Ridge as opposed to being a gated community.

“The architectural style is similar to that of Izinga Ridge’s earthy African palette and Mediterranean/Balinese form, spoiling residents with large open spaces and areas where they can walk, run, cycle or just enjoy the fresh air and breathtaking ocean view, says Bailey.

In these challenging economic times, developments have suffered perhaps the worst of the brunt. “Izinga, however, has done exceptionally well, which can be attributed to its prime position, among other factors,” adds Bailey, who also notes that phase one of the land sales is almost completely sold out.

Describing Umhlanga as Durban’s Sandton by the Sea, Bailey notes that the north coast has shown solid growth and that demand currently exceeds supply for high quality, secure, gated estates in Umhlanga while non-gated estate land in prime positions are also sought after.

Adrian Goslett, CEO of RE/MAX of Southern Africa says Izinga’s close proximity to prime amenities such as the Gateway Theatre of Shopping on top of Umhlanga Ridge, the Umhlanga Hospital, the burgeoning Umhlanga Ridgeside business district and excellent private and public schools, makes it one of the most sought-after development opportunities in KwaZulu-Natal.

Contact Gareth Bailey, RE/MAX Address on (031) 313 1310 for more information.



The Upper Highway market seems to be holding its own despite the prevailing weak economic conditions.
Residents that opt to move out of the central Durban zone are migrating either westward to the Upper Highway areas like Kloof, Gillitts or Hillcrest or northward to the suburbs of Durban North, La Lucia and Umhlanga.

The leafy suburbs of the Upper Highway remain a popular choice for a variety of reasons. Residents enjoy the slightly cooler, fresh air and the relaxed country village feel of the area whilst still retaining access to the city’s main commercial nodes.  In addition, they are spoilt for choice with a plethora of quality schools in the area including Highbury, Hillcrest Christian Academy, Hillcrest Primary School, Hillcrest High School,  Kearsney, St Marys and Thomas Moore to name a few.

The upgrade of the Hillcrest Old Main Road over the last year has been a thorn in the side to residents but the project should be completed soon.  Access to quality shopping centres and the increase in dining and entertainment options has facilitated the transfer of residents from areas like Durban and Durban North to Hillcrest and the surrounding areas.

Upper Highway properties range in price from R750,000 for an entry level property to R1,5 million to R2,5 million for a mid-level 3 bedroom house situated on half an acre. In the upper end of the market, equestrian properties are priced all the way up to R12 million.

However, most property activity in the area is being reported under the R1,5 million mark. Buyers are still mindful of the prevailing economic environment and are discerning in the amount they are willing to pay for their homes.

Sellers need to be aware that, although optimism levels have risen in the wake of the World Cup, they need to price their houses realistically if they want to sell. The reality is that the residential property market has taken a knock and is not expected to recover in leaps in bounds but rather at a gentle pace. They should engage reputable agents to assess the sale of similar properties in their area before deciding on a price.

There has been a great deal of interest and activity in some of the more established secure lifestyle estates in the Hillcrest area. Our agency has been particularly active in the Plantations estate with close to R30 million in sales year to date.

Properties on the estate range from R900,000 for a 90m2, 2 bedroom, 1 bathroom simplex or duplex to about R1,5 million for a 180m2, 4 bedroom, 3 bathroom duplex.

Freestanding houses range from R2 million for a 200m2, 3 bedroom, 2 bathroom house to R2,5 million for a 250m2, 4 bedroom, 3 bathroom house. Larger houses are available escalating in price at a rate of approximately R10,000 per square metre.

The estate prides itself in its security, and boasts an Italian restaurant, pub, coffee shop and deli, hairdresser, crèche and children’s play area all on the estate. One of Plantations key benefits is its accessibility to the M13 which saves residents from having to commute along Old Main Road or Inanda Road in peak hour traffic.