Most SA houses worth less than R500k

Johannesburg – More than half of South Africa’s six million residential properties registered in the Deeds Office are worth less than R500 000.

Currently, 3.5 million or 58% of these properties fall in the so-called affordable category – properties under R500 000 – 47% of which are in former townships. This emerged from new data from the Affordable Land and Housing Data Centre (al+hdc), which was announced on Wednesday.

This data centre is an initiative by the FinMark Trust, Urban LandMark, Lightstone and Eighty20. It is aimed at a comprehensive analysis of the market for affordable housing.

Although this market provides the overwhelming majority of accommodation in the country, it’s the market about which the least amount of information is available. The al+hdc is a database of properties in 2 400 residential areas, where the average property is worth under R500 000.

At current mortgage rates this housing would be affordable for households earning less than R16 000 a month – 88% of the country’s population.

This type of accommodation includes existing houses in former coloured, black and Indian townships, housing subsidised by the state, and new housing being developed by the private sector.

The affordable housing market is the market that is growing the fastest in terms of volume and value. More affordable homes worth less than R500 000 are being built each year than the more expensive houses.

Since 2004 an average of 70 000 new affordable units, including state-subsidised houses, have been registered at the Deeds Office per year, compared with 65 000 in the category of houses costing more than R500 000.

Although fewer new houses in the above-R500 000 market have been built since 2007, the figures have remained constant in the affordable housing market.

As far as housing finance is concerned, banks are very active in the affordable market – and the four big banks have taken the lead.

Absa has the biggest market share in terms of the number of mortgages granted to buyers in the affordable market, followed by Standard Bank, Nedbank and First National Bank (FNB).

But Standard Bank has the biggest market share based on the value of the properties, followed by Absa, Nedbank and FNB.

In all, 45% of properties worth between R250 000 and R500 000 in the affordable areas are financed by mortgages, compared with 63% of properties in the same price class in residential areas where the average price is above R500 000.

This article has been reprinted with the kind permission of Betterbond
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Tentative recovery likely, Bank warns

The leading indicator of business activity in SA dipped slightly in August after a strong rise in July, adding to evidence that the recovery is tentative and may slow down over the rest of the year.

The leading indicator, which points to trends six to 12 months ahead, declined 0,1% in August, after a robust 1,3% rise during the month before, figures from the Reserve Bank showed.

The Bank’s economist, Iaan Venter, said that while it was dangerous to look at one month in isolation, the monthly dip was part of a sideways trend, suggesting that growth remained subdued.

“I still believe it’s indicating a moderate growth trend,” he said.

Other figures yesterday showed that company failures rose 2,1% last month compared with September last year, after a fall of 8% in August.

“Business is still struggling,” Investec economist Kgotso Radira said. The data from Statistics SA did not bode well for household finances and consumption going into the festive season, he said.

Consumer spending is the economy’s main growth engine, accounting for 60% of demand.

“This is a further indication that more jobs were lost in the third quarter of this year,” Mr Radira said in a research note.

“Employment growth is only expected to start emerging in the latter part of 2011 when growth starts gathering momentum.”

SA’s economy shed more than 1-million jobs since the start of last year, making it one of the hardest- hit emerging markets during last year’s recession, in terms of jobs.

Last week, Finance Minister Pravin Gordhan said the economy would expand faster this year than the 2,3% predicted in the national budget last February.

Updates to official forecasts are due in the Treasury’s medium- term budget policy statement tomorrow, with market consensus betting the economy will grow about 3% this year. The Treasury’s estimate will probably be lower, reflecting its traditional caution.

The “basically unchanged” leading indicator pointed towards “stability and recovery” in the economy, said Brait ’s Colen Garrow.

But no one should be “wildly optimistic” that growth would be more than 3% this year.

Mr. Garrow sees the economy expanding just 2,3% next year — well below market consensus.

The Reserve Bank’s data showed that six of the leading indicator’s 11 components were negative during August.

This included the average number of hours worked by factory employees, probably due to strikes in the vehicle industry.

Building plans approved also had a negative effect.

The value of plans passed by municipalities between January and August this year fell 7, 8%, or by R3, 3bn, compared with the corresponding period last year, official data showed last week.

The weak performance of the leading indicator was in step with SA’s main trade partners, according to the Bank’s data yesterday.

Compared with the same month last year, the index rose 18,8%, but this reflects the “base effects” of last year’s recession.

It was also lower than the 20, 4% increase seen in July.

This suggested that although growth in the economy would slow in the months ahead, it might not be as severe as expected given strength in the rand, Stanlib economist Kevin Lings said.

The rand scaled a 33-month peak at R6, 76 to the dollar earlier this month, but has since relinquished some of its gains, trading at R6, 90/ yesterday.

“There is a reasonably good relationship between the leading indicator and overall economic activity,” Mr. Lings said.

“This suggests that the South African economy should show solid growth in 2010, with some loss of momentum into the second half of this year … but not a very significant slowdown,” he said.

Last month’s rise in liquidations was driven by failures in finance, insurance, real estate and the business services industry. Most were voluntary.

Other data from Statistics SA yesterday showed that the number of individuals and partnerships that were declared insolvent dived 47,2% in August compared to the same month last year.

That was the ninth successive year-on-year decline.

This was “further evidence that the number of individuals and partnerships that cannot pay their debt is declining relative to last year”, Mr. Radira said.

Household finances would take some time to improve due to high debt levels — which are still hovering at 87% of disposable income — and the rising cost of living, which was outstripping growth in income, he said.

“The deleveraging process will take some time … the rapidity will largely depend on the pace of employment growth.”

The indicator has a good correlation with the Organisation for Economic Cooperation and Development (OECD) leading indicator, which tracks the global economic cycle, with a short lag.

The OECD leading indicator has moderated downwards slightly on an annual basis over the last few months, suggesting that SA’s leading indicator would also move lower in the months ahead, Mr. Lings said.

Written by Alistair Anderson
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Things just got a whole lot Better

We are heading into the end straight of 2010, a year that has held hope for a recovery from the doldrums of 2008 and 2009. While the outlook does not look terribly rosy for consumers as far as their debt-to-income ratios are concerned, the hope for improved market conditions has been vindicated to a degree, particularly for the property industry, with estate agents around the country reporting an increase in sales volumes.

However, affordability will continue to feature strongly as the National Credit Regulator’s first quarter report indicated that credit bureaus had records for 18.21 million credit-active consumers as at the end of March 2010. Of these credit-active consumers, only 54% were classified as in good standing while the number of consumers with impaired records continued to increase reaching 8.37 million. This h indicated a deterioration in the credit records of 191 000 consumers quarter-on-quarter and 915 000 year-on-year.

However, while consumer’s debt issues have not shown much of an improvement, the continual steady increase in market activity has restored faith in property as an investment and as a career option. But it is only those forward thinking, solution-oriented people who need apply – real estate is no longer merely an order-taking business, but rather one where agents need to be motivated, professional, innovative and involved in order to make their mark. There are those individuals who excel at this, who go above and beyond to elevate their communities, the industry and their careers in real estate as was evident at this year’s annual Nedbank Property Professional of the Year awards.

For the past 11 years the winners of the coveted Nedbank Property Professional title have raised the bar, and this year was no different. Congratulations to the overall winner, all 16 finalists whose incredibly high standards made the competition tougher than ever, as well as the Young Lions, Movers & Shakers and other award recipients. At the end of the day, achieving success comes down to how you create and establish your own personal brand.

If you live up to your brand promise, your brand can be a strong marketing tool that will ensure loyalty, repeat customers, and ultimately, success. This is one of the reasons that the PA Group has embarked on a rebranding campaign that is currently being rolled out. Up until this point in time, the PA Group and its subsidiary companies followed a multi-branding strategy. This means that none of the names are related and all the different companies function independently of each other in the market place.

However, as the storms of the recent recession set in, it became evident that a multi-branding strategy is more costly to support and didn’t allow for the optimisation of synergies that exist between the different subsidiaries of the PA Group. After much deliberation it was decided to move from a multi-branding strategy to a single-branding strategy, where the subsidiaries of the PA Group will become interlinked. As South Africa’s leading mortgage originator, the Betterbond brand was the best known in the Group, so we decided to leverage off the name by adding “Better” as an adjective to both the Group and its subsidiaries. This means that the PA Group has changed to BetterGroup, Betterbond has changed to BetterBond, Paforma has changed to BetterBridge and Aspire has changed to BetterCredit.

The Group’s new slogan, “Getting you Ahead”, is central to its value proposition of getting you ahead by streamlining the home loan application process, organising quick access to funds in terms of bridging finance and all in all providing a better service than ever before.

They say that a chain is only as strong as its weakest link – now the PA Group’s link will be as strong as the brand that it is building up. In line with our new brand identity, we have also introduced a new icon of two interlinked circles. The icon will ‘link’ all the companies in the Group together and also represents what we do in linking clients to their home by facilitating the home loan. In the same way we bridge or link clients with funds through providing bridging finance. The same holds for BetterSure and BetterCredit. No experience, prestigious award or qualification will ever make a lasting impression if you don’t proactively and consistently build and manage your personal brand and reputation with integrity. As Abraham Lincoln said, “Character is like a tree, and reputation is like a shadow. The shadow is what we think of it; the tree is the real thing.”

Written by Rudi Botha
This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 677 1162
Website: www.betterbond.co.za

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