HOLIDAY TOWN HOUSE PRICE PERFORMANCE

Are we finally seeing decent prices on holiday homes
According to FNB's John Loos

Due to the non-essential nature of a holiday home, holiday home buying has taken more of a back seat to primary residential buying during the tough financial times of recent years. Now, in 2012, after a very significant real price decline in the FNB Holiday Towns Index, some return to price stability may be being observed.

The holiday property market has had major challenges in recent years. After the 2008/9 recession South Africa’s household sector has been under significant financial pressure, and the sharp rises in municipal rates and utilities tariffs related to housing must surely have caused a good number of aspirant holiday home buyers to rethink the merits of owning a 2nd home for leisure purposes.

The FNB Estate Agent survey appears to tell such a story. Whereas back in early-2007, prior to the recession, the sample of agents surveyed estimated that 5% of home buying was for holiday home purposes, in recent years the percentage has ranged between 1% and 3% of total buying. In the 3rd quarter survey of 2012, the percentage of buyers buying for holiday home purposes was estimated at 2%, unchanged from
the previous quarter.

Therefore, our agent sample certainly doesn’t point to a strong holiday buying market, but one that is slightly better than the low of Winter of 2011 where only 1% of buying was believed to be for holiday purposes.

However, it is possible that after a major downward correction in real holiday town home values, the combination of holiday home buying being slightly up off the low point, combined with improved price realism, may have led to a move towards real price stability in holiday town markets.

For non residents buying in SA - is great now and doing money transfers to South Africa has never been easier with free money transfers.

Transfer money to SA from UK and Eurozone

• From the UK comes the news that the Bank of England backed away from stepping up its program of government bond buying on as the economy starts showing signs of growth with expected increase in  lending.
• On the EU front -  European Central Bank President Mario Draghi said that the ECB was primed to buy troubled Eurozone bonds when conditions were right and that this had already calmed financial market tension - hopefully this remains true.
• Still in the EU - The Euro had gained strength because it seems the ECB were to progress with financial stimulus and calm the nerves of investors. Remember there was no rate cuts or monetary easing, the ECB president said he was “Primed to buy troubled Euro bonds when conditions were right.” The fact he mentioned this has helped the Euro maintain its gains across the board. 

So time to use your Euros or UK pounds and invest in SA  so transfer money to SA.

Interest rate and tips for your home loan!

“An interest rate cut should have some mildly positive impact on the property and home loans business.”

well that is true to some extent but you cannot just rely on this.

So some simple but sound tips for householders and the man in the street:

STAY WITHIN YOUR BUYING MEANS -  Although interest rates are at historical lows, home buyers should buy well within their means, in order to make provision for a significant degree of interest rate increase in future, these will come somewhere and somehow.

Watch the external costs - Costs related to housing such as municipal rates and tariffs are escalating at rates significantly higher than consumer price inflation.

While it is difficult to predict when these rapid increases will subside, given South Africa’s infrastructure funding needs, this makes it even more essential to borrow well-within one’s means, and ensure you read the meter and watch the leaks.

Peg your rate - Besides buying well within your own means so as to be able to absorb future interest rate hikes, because they will come, fixing interest rates is another way of being better prepared for this eventuality.  However your fixed rate will be quite a bit higher than prime.  So plan for this

Use it or ,lose it.

Resources: To Buy or Not to Buy. .. That is the Question?

Not all that glitters is gold, or so they say. Perhaps they’re right, since the JSE Resources index is down 7.76% so far this year. Seems strange though, since the JSE ALSI is up 11.09% over the same period. You’d probably guess that’s because the other sectors have performed phenomenally well. Well, you’d be correct, since the JSE Industrial and Financial indexes are up 23.01% and 24.28% respectively year-to-date.

So, who is to blame? One could start by pointing a big finger at Anglo. While thousands of athletes in London might be chasing Gold, I’m afraid it hasn’t done much to boost Anglo’s performance. Anglo contributes 8.2% of the JSE ALSI Top40 Index and is down a whopping 19% this year. While some might speculate the company is a bargain buy at this level, this will very much depend on the prices of the commodities it sells.

The key influence for hard commodities in the short term is the critical support levels of the Euro. The Euro must hold! Policy responses by central banks, predominantly in the form of lowering interest rates, will be the main driver over the medium term. Although commodities are heavily oversold, they may have hit bottom in Euro terms, and that includes Gold.

If Nedbank Capital is to be believed, the JSE ALSI will be trading at a forecast 11.5 times earnings over the next year. This is below the 12.8 times average since the formation of the new South Africa. Financials seem to still hold some value, trading below their averages, while Industrials are slightly higher than their averages. SA Listed Property Index is up 29.97% this year and remains over-valued, just as it has been by skeptics over the past decade.

All in all, the world seems more positive following announcements last week from the European central bank. Perhaps a good time to consider getting some of the action as the market shifts into 2nd gear.

General Update – Interest rate cut...
If you don’t know by now, the repo rate was cut by another 50 basis points. This takes us to the lowest prime lending rate since 1973. This provides some small relief for the average consumer, who statistics show is highly indebted, with a debt-to-disposable income at 74.7%. It seems the average South African can use all the help they can get, since the cost of a basic food basket has increased by an average of 16% year-on-year for the last 5 years.

It seems that even the smallest amount of equity (shares) in your portfolio may now be required to beat inflation over the long term. Not good news for those in a risk adverse position.
Statement of the Month – “Teenagers are people who express a burning desire to be different by dressing exactly alike.”

Food for Thought – Cameron Van Den Burgh’s Olympic Gold is ironically, barely gold at all: in fact, it’s 92.5 per cent silver, with just one per cent gold and the rest copper. Basic Value – around R5,200.

The Tea Break


David te Brake
Pioneer Financial Planning
011-880-4710
davidt@pioneer.co.za

Richter & Associates Architects (STAY AWAY)

It is very seldom that I need to write BLOG posts of this nature, in fact the last time we wrote any warning about any companies was during the phase of all those cheating and stealing bond originators who were charging clients rediculous fees for bond applications. RUDCO - despicable company...

Recently I have had a personal experience with an architectural firm based in Pretoria, South Africa called Richter & Associates Architects (http://www.r-aa.co.za/) - they don't deserve this backlink...

Although I admit myself having been short sighted by signing a contract and not stipulating certain guidelines that we had discussed in an initial meeting, being a man of my word, I kind of took them to be men of their words....Oops did I say men?

BOY WAS I WRONG!

I will not mention the peoples name that I dealt with but, Richter and Associates architects are not people of their word and they rip people off of their money.

1. R200 000 architectural fee's for plans that were drawn up before we even met them (i could've downloaded these off the net)
2. They never listened a single request or requirements that we had (gave them photo's and pictured of big glass doors opening up onto the wooden deck - They created Romeo and Juliet balcony's with a grass deck)
3. Every time we met them, they came back with the plans that they wanted and the design and look and feel that they wanted and not what US the paying CUSTOMER was looking for!!!
4. Never did they stick to their word or what they promised they would do for us (Except when it came to paying)

When we finally decided we'd had enough and put up a stinker from here to kingdom come, Richter and Associates architects all of sudden dropped their fee's by R90 000.... WHICH COMPANY do you know can drop their fee's by 50% without blinking!!!!

So this BLOG post is to say to people that are thinking of building and designing their dream home:
1. STAY AWAY Richter & Associates Architects
2. Always make sure that when you sign the contract that you stipulate EVERYTHING in terms of your requirements on that contract
3. If you're doing a building bond cause you think you can include ALL the fee's in the building bond (including the architects) MAKE SURE that you stipulate that you will pay a deposit but the remainder of the fee's will only be paid upon successful acceptance of the building bond application with the banks.

"If you don't do this" - they will ask for their fee's upfront!!!!