Value increases in estate living

Value increases in estate living

Living within a secure estate is becoming increasingly popular. With demand on the rise, prices are seeing a steady increase year-on-year. As estates become more and more all-encompassing, most predict that this trend towards estate living is here to stay.

According to Lightstone Property’s April newsletter, freehold property inflation dropped to 6.89% at the end of 2021 and sectional titles dropped to 3.17%, while estates ended 2021 at 3.87%, which is the highest it has been since early 2017.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, attributes this growth to multiple factors. “While there are many ways to explain this growth, I suspect that one of the reasons might be an overspill of changes brought about by the pandemic. Time spent in hard lockdown had many reconsidering their priorities. Suddenly, being close to work was no longer a top consideration and the safety and security offered by an estate seemed more appealing,” he postulates.

While estate living has become popular across the country, Gauteng is arguably one of the provinces where it is in highest demand. Frikkie van Eeden, Broker/Owner of RE/MAX Advantage in Rosebank, explains that his office is seeing a steady demand for estate living in the area. “A steady price increase in these estates flows from this. This is contrasted against a 20% decrease in value in freehold properties in and around Sandton and Rosebank,” he explains.

When asked what causes this growth in demand, van Eeden explains that estates offer the whole package. “Most offer great amenities, a sense of space and, in Johannesburg, a premium is placed on the safety these estates offer. They have become one of the rare places where you can still see children riding their bikes to the park,” he explains.

In addition to this, van Eeden mentions that other services are also migrating to these estates with hospitals, schools, and shopping centres being constructed to serve what is becoming fully enclosed communities in some instances. “All this is increasing the attractiveness of these estates, so much so that we are now finding that high rise developments are having to dedicate very valuable floor space to create common areas such as pools and gymnasiums in an effort to attract similar levels of demand,” he notes.

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“In my opinion, this trend towards estate living (within Gauteng specifically) will remain for the foreseeable future. Estate living ticks all the boxes and in South Africa, the security these estates offer has made them the go-to for all who can afford them. I can only see the demand for Estates in and around Johannesburg increasing even further in the next couple of years. The only hurdles being the increasingly high pricing point and a combination of proximity to the workplace and inevitable returning traffic.”

Goslett echoes his sentiments and is curious to see what the future has in store. “Right now, it is difficult to predict how long companies will remain flexible with their remote working policies. If more companies return to the office full time, I predict that demand will shift back towards city-centres, which could have an affect on estate pricing. But, this is only a prediction; the best way to stay on top of market trends as and when they change is to keep in touch with a local real estate professional who can send you regular updates on how your market is performing,” Goslett concludes.

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New cannabis bill could see construction taking the high road

New cannabis bill could see construction taking the high road

The proposed amendments to the Cannabis for Private Purposes bill that seeks to further decriminalise cannabis usage and legalise South Africa’s commercial cannabis industry could have serious ramifications for the construction industry if employers do not put appropriate measures in place to ensure that all on-site workers are working safely and following the correct safety procedures.

“Besides the fact that construction sites are riddled with job hazards, the work itself is physically demanding, so it’s not unheard of for workers to use cannabis as a means of dealing with the physical pain and mental stress that comes with working on a construction site,” says Databuild CEO Morag Evans. “Research reveals that at least 15 per cent of construction workers are cannabis users. The effects of cannabis may last many hours, which means that workers who have used the drug at home could still be high when they report for work.”

It is well-documented that cannabis has a detrimental effect on the user’s occupational capacity. Impaired concentration means tasks are performed more slowly, routine tasks are executed poorly, and the worker has difficulty in making crucial decisions and taking instructions from superiors.

“If these workers operate heavy machinery, vehicles and other dangerous tools and equipment while under the influence they not only place themselves at risk, but also their co-workers,” says Evans.

Statistics published recently by the Federated Employers Mutual Assurance Company (FEM) reveal that an average 36 people are injured on construction sites daily.

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“These figures are cause for serious concern, but what is even more worrying is that they only apply to FEM-insured employers,” Evans points out. “This means that the number of accidents occurring in the construction industry is actually higher than what FEM is reporting.”

The Occupational Health and Safety Act mandates all employers to provide a safe and healthy environment for their employees, but besides these legal obligations, Evans says all construction industry employers have a moral responsibility to ensure that construction sites are free from any risk to their health and safety of their employees.

“Employees must be protected from anything that could be a potential hazard to the construction site, including risky construction activities, infectious disease (such as Covid-19) and substance abuse.

“Additionally, training and awareness programmes that highlight the effects, signs and consequences of substance abuse should be implemented, together with rehabilitation and support programmes for workers who are identified as having a substance abuse problem.

“Most importantly, workers need to understand that health and safety legislation, policies and programmes are not intended to be punitive but are formulated in their best interests,” Evans concludes. “Employers do not want their workers to lose their jobs. They just want them to be safe.”

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House price inflation as at end April 2022

House price inflation as at end April 2022

National year-on-year house price inflation is at 4.55%, having decreased consistently since early 2021. Annual inflation remained steady in Mpumalanga and North West, increased in Limpopo and the Northern Cape, and decreased in
the Eastern Cape, Free State, Gauteng, KwaZulu-Natal and the Western Cape.

Annual inflation in the low-value segment remains higher than that in other segments, but the magnitude of the difference has decreased significantly; inflation for properties in Low Value markets was 5.8%, compared to 5% for properties in Mid Value markets.

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Interest rate hiking cycle continues

Interest rate hiking cycle continues

The cycle of interest rate hikes continues following the latest announcement by the Monetary Policy Committee (MPC). The repo rate climbs by 5 basis points to 4.75%, leaving the prime lending rate at 8.25%.

Regional Director and CEO of RE/MAX of Southern Africa , Adrian Goslett, says that this decision was predictable and in line with other statements provided by the MPC. “My hope is that homeowners have planned for these interest rate hikes and have already made room in their budgets to afford the slightly higher debt repayments,” he comments.

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Knowing that more interest rate hikes are forecasted for the year ahead, the question of whether to fix the interest rate on a home loan has come up more and more frequently. “The truth is that there are so many unknown variables around interest rate fluctuations that it is impossible to tell with absolute certainty whether fixing your interest rate now will be more beneficial for you in the long run,” says Goslett.

Rising interest rates also pose challenges for real estate agents, as buyers are becoming more hesitant to purchase while interest rates are still climbing. “My advice to real estate practitioners at this time is to remind buyers that prime was at 10% pre-COVID, which means that interest rates are still at record lows despite these interest rate hikes,” he advises.  

For buyers who are still concerned about the rising interest rates, Goslett suggests that real estate agents put their clients in touch with a bond origination service, such as BetterBond, not only to help buyers perform affordability calculations at higher interest rates to put their minds at ease, but also to help them get the best possible deal on their home loan.

“I do expect that buyer activity will take a knock following this latest hike, but the demand for homes priced at fair market value should not be negatively affected following this latest announcement. This is where pricing a home correctly becomes so much more important. Sellers should lean on the advice of reliable real estate professionals to make sure they price the home correctly during this time,” he concludes.

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Greater Tygerberg Partnership invites the public to comment  on Bellville’s future

Greater Tygerberg Partnership invites the public to comment on Bellville’s future

May 2022: The Greater Tygerberg Partnership (GTP) urges local residents, businesses, and investors to comment on the City of Cape Town’s draft local spatial development framework (LSDF) for the Bellville Central Business District (CBD).

The draft LSDF proposes the City’s vision for the regeneration of the Bellville CBD, the second metropolitan node of the Mother City. Bellville CBD has seen remarkable growth over the last decade, with recent developments amounting to billions of Rands. However, Bellville CBD and its surrounding suburbs, particularly to the South, suffer from blight and deprivation.

“The GTP plays an important role in promoting the City’s vision for Bellville amongst Bellville’s communities, businesses, surrounding tertiary academic institutions, and public sector occupiers. Projects proposed by the LDSF include: the implementation of a new vertically integrated multi-modal Bellville Public Transport Interchange and plans to improve both metropolitan and local accessibility, amongst others,” says Warren Hewitt CEO at The Greater Tygerberg Partnership (GTP).

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The profile of the Bellville CBD has shifted in recent years, reflecting a growing trend towards integrated diverse urban lifestyles in response to a demand for more accessible transport, access to work opportunities, student amenities, and affordable housing infrastructure.

The LDSF seeks to exploit Bellville’s central location and high accessibility to leverage the principles of transit-oriented development and create urban spaces with a mix of high-density, residentially-led development, with commercial, retail, and recreational spaces that are safe and convenient for walking and cycling. Implementing quality social amenities for residents and releasing vacant City-owned land for mixed-use development is a core objective of the City’s LSDF.

“The GTP welcomes the City of Cape Town’s draft LSDF and supporting long-term investment plans for the regeneration of Bellville. The proposed projects include significant investment from both the public and private sectors in roads, utilities, affordable housing, and innovation which will undoubtedly transform Bellville into a more sustainable and thriving urban centre. We believe that the people who live, work and play in Bellville know and understand best the need and potential for the future growth of Bellville. We encourage everyone with an interest in the future of Bellville to comment on these proposals before the 4 July deadline,” says Hewitt.

Despite the strain put on their budget over the last two years due to the Covid-19 pandemic, the City of Cape Town renewed their fourth three-year-long funding agreement with the GTP last year, bringing renewed security to residents and businesses that GTP-led initiatives will continue well into 2023.

Once the public participation process has been concluded, the draft LSDF will be revised to include the comments received from all residents, business owners and investors before being submitted to Council for its approval. The LSDF will then become City policy and guide land use and development applications for the Bellville CBD from 2023 onwards, in conjunction with the Tygerberg District Spatial Development Framework, and Municipal Spatial Development Framework

The draft LSDF documents are available for download from www.capetown.gov.za/haveyoursay or can be viewed at the sub-council 6 offices, or at the Bellville Public Library, Carl Van Aswegen Street, Bellville.

Participate in the Metaverse

Embrace the future and visit the Public Participation programme in the GTP’s own Metaverse by following this link. No fancy virtual reality sets are required, just plug in a headset to your desktop or laptop and use Chrome as your browser.

To participate:

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Prepare for interest rates to climb further

Prepare for interest rates to climb further

The pendulum has swung following a season of record-low interest rates, moving the country into a cycle of interest rate hikes. Set to meet again in May, the South African Reserve Bank’s Monetary Policy Committee (MPC) is expected to hike interest rates further. Homeowners are advised to evaluate their finances ahead of the announcement to make sure they can afford the potential increase.

At the previous MPC meeting, two members preferred a 50 basis point rise in the repo rate while three were in favour of the 25 basis point increase. To play it safe, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, recommends that homeowners check what their monthly repayments would be if interest rates were to rise by 50 basis points at the next meeting.

“There are various online calculators that can help homeowners work out the possible repayments on a home loan. BetterBond, for example, has a repayment calculator that can help homeowners work out what the repayments will be depending on the size of their home loan and their given interest rate,” Goslett explains.

Equipped with this information, homeowners can then examine their budgets to find the necessary funds to afford the higher repayment amount if interest rates do indeed increase. “Being well prepared in this regard can mean the difference between being financially secure or falling hopelessly behind on repayments,” says Goslett.

In addition to this, Goslett warns that, unless the accompanying interest rate charges are fixed, the repayments on all other debts will also increase should interest rates climb at the next MPC meeting. “The disposable income for those who carry other forms of debt will shrink with every interest rate hike. My advice, especially for those who are paying off a home loan, is to funnel any extra cash towards those other debt repayments ahead of the coming announcement.”

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Elaborating on this, Goslett explains that when deciding which debts to settle first, it is advisable to go for the debt with the highest accompanying interest rate charge. “Things such as a car loan or personal loan will often carry far higher interest rate charges than a home loan, so it might make sense to try and pay off these debts as soon as possible,” Goslett suggests.

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However, everyone’s situation is unique. Those who would like advice specific to their circumstances are encouraged to speak to a professional financial advisor. Those who are unable to keep up with the repayments on their home loan should also speak to a real estate professional to find out what other options are available to them.

“Moving to a smaller, more affordable home might relieve the financial pressure and create a much less stressful home environment. You’ll never know what’s out there unless you start searching. Having a reliable real estate expert at your side while you search can also make the whole experience a lot less stressful. For those who are feeling the financial pressure, I would highly recommend speaking to the professionals before things get too out of hand,” Goslett concludes

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