SUBURBS ARE DEAD, LONG LIVE GATED COMMUNITIES

Realestateweb reporter
15 April 2009

High profile crime victim reckons secure estate properties will rise in value at expense of homes in posh suburbs. Agree?

A high profile crime victim says he is going to emigrate - from a house to a secure estate. And, he reckons, he's part of a trend that will see estate properties rising in value at the expense of stand-alone houses.
Michael de Broglio, a former chairperson of the Johannesburg Attorneys Association and Gauteng Law Council and Law Society Councillor, was held up by armed robbers in a decent Sandton suburb "without too much of a name for crime" at the Easter weekend.
Like other Gauteng residents, this is not the first time De Broglio and his family have had a close brush with violent criminals. His mother has had a knife held to her throat in a PArktown Norht house, and a brother was a victim in a hijacking in which shots were fired.
Finally De Broglio has had enough, but he is not moving to another country where violent crime is the exception rather than the rule. Instead, he says he will move to a more secure living area.
In a letter, he writes: "While a lot of people have immigrated, my immigration will be away from these suburbs, and to one of the gated communities with proper, drastic security that are all springing up all over Fourways. The traffic is horrendous, as everybody knows, but there is a reason that there has been such a flood of people there and that one secure estate after another, and I am talking about the ones that don't let you in even when somebody confirms that you can come in without first taking down your identity number and checking your ID documentation. "
De Broglio says he doesn't relish the thought of spending many hours a day commuting to and from work but would rather do that than allow his family to be vulnerable to criminals in his home.
"I can't say I am terrified. My wife says she is not affected and does not need counselling - but is snapping at me a bit more than usual and (I) did not sleep half of last night. I could endure a hijacking like that again and not leave South Africa."
He continued: "I don't feel it was so bad. What I cannot handle is the thought of the gate closing, they staying behind and drinking a bit more and what lies after that. And for that I will drive two hours a day and if need be hire a driver and sit in the back with my Dictaphone, e-mails and connected laptop. It's quite sad what we accept here and what we consider to be alright or not too bad," he says.

De Broglio says there is a flipside to remaining in a country that many others have fled to get away from high crime. Speaking to Alec Hogg on the SAfm market update earlier this week, he remarked: "I must in fairness say what I've said to senior attorneys before. Do you realise some of us would never be who we are, or have risen as quickly if it were not for the fact that the major competition already emigrated 20 years and 10 years ago - and I think that's true of all young professionals."
The leading Johannesburg lawyer says there are "wonderful opportunities in South Africa" and that other lawyers who have emigrated are still partially practising in South Africa. An interior designer friend is moving to Mauritius and will be commuting from there.
De Broglio told Hogg too that "the hijacking thing - you could do that to me five times and I wouldn't leave". "It was frightening but I don't think it's the end of the world."

SA FACES LONG HOUSING RECESSION

Mar 23 2009 14:08
Joan Muller
Johannesburg - House prices are likely to fall at a rate of double digits in 2009 despite the prospect of another 300 basis points in interest rate cuts, says First National Bank.
FNB's Residential Property Barometer for first quarter 2009, which was released earlier on Monday, offers little hope of a meaningful recovery in housing activity any time soon.
FNB property strategist John Loos says the average drop in house prices is likely to exceed 10% year-on-year by mid-2009. And while further rate cuts may well start to stimulate demand for property again towards year-end, any upturn could be short-lived.
Loos expects house price growth to return to low single digits by mid-2010, but warns that that there is a real risk that the housing market could fall back into a recession by 2011.
"I don't have hopes for fantastic property returns for a number of years as there is quite a high risk that the world will stay in recession for some time to come."
Despite the gloomy outlook for house price growth, FNB's latest quarterly survey among estate agents has recorded an increase in show house visitors. However, other areas of the survey still point towards a rather "unconvincing" picture, says Loos.
Loos says after a slight improvement in the fourth quarter of 2008, both the percentage of properties sold for less than asking price and the average time it took to sell a house deteriorated.
The percentage of properties sold at less than asking price rose to a hefty 86% in first quarter 2009. At the height of the property boom in 2005, only 30% of properties were sold below asking price.
Emigrant sales on the decline
In addition, it is now taking close to 18 weeks (four-and-a-half months) to sell a house. That is up from around six weeks in 2005. Loos says these figures clearly suggest that many sellers are still not realistic in their price expectations.
Downscaling due to financial pressure is still cited by estate agents as the single most important reason for selling. Loos notes it is encouraging to see the importance of emigration as a reason for selling taking a back seat in recent months.
The percentage of sellers who plan to emigrate has dropped from 20% to 11% over the past six months.
This is probably due to a weak global economic situation, creating poor job prospects in many of the popular emigration destinations. Says Loos: "It's become a costly exercise to relocate to London, just to be retrenched."
Loos says falling inflation and interest rates aside, sentiment in the household sector as well as that of banks is likely to dampen further over the coming months, as fears around job losses mount.
"One should thus not expect residential demand to skyrocket as it did in 2003/2004 when rates fell rapidly. At the time, rate cuts were accompanied by a very positive economic growth and employment situation. One should also not expect credit criteria to ease dramatically any time soon."
Meanwhile, the number of homeowners battling to meet monthly mortgage repayments continues to rise. FNB Home Loans CEO Jan Kleynhans says 8% (or 1 360) of FNB's 170 000 home loan costumers are in arrears for three months or more. That's up from about 1% two years ago.
- Fin24.com

PRICES OF BIG HOUSES FALLING MORE

Apr 09 2009 08:27
Elma Kloppers
Johannesburg - Nominal prices in the large-house (221m² to 400m²) market segment are now falling the most they have in 23 years. Nominal house prices do not include the effect of inflation.
Absa's latest house price index indicates that prices in this sector were nominally down an annualised 3.2% in March, the biggest decline since June 1986.
This brought the average price of a large house to around R1 352 400, almost R45 000 less than the R1 397 300 average in March last year.
"This indicates that the weak economic conditions are now impacting the upper end of the housing market as well, forcing some home-owners to scale down to smaller, cheaper homes," says Jacques du Toit, senior property analyst at Absa's home loan division.
At the same time new buyers are considering houses in the small segment (80m² to 140m²), with this segment consequently reflecting the smallest nominal decline in the three segments. Prices in this segment came down 0.6% on annual basis in March, bringing the average price of a small house to around R677 600, R4 400 less than in March last year.
The average nominal price of a medium-sized house (141m² to 220m²) fell an annualised 1.8% in March, bringing this segment's average to R932 700.
Du Toit does not expect the housing market to recover this year. "The weaker economic conditions are persisting for longer than expected and are still filtering through to the market."
Despite further anticipated interest-rate cuts, he considers households will continue to be under financial pressure, especially against the background of the weaker economy where more job losses could have a negative effect on household incomes, confidence and expenditure.
- Sake24.com.

You're a What? Property and your profession

"You're a what?" Property & your profession
Rodney Hayter*
07 April 2009

Yes, banks are scrutinising the likelihood of you keeping your job in the tough economy, risk-rating your profession before granting home loans.

Major banks attitude toward home loan applications is toughening to the point where they now, as a matter of policy, include the evaluation of the type of profession in their assessment of the risk profile of the applicant.
Their vamped up vetting, according to Grant Gavin, also includes the risk weighting of the mix of professions based on the banks history of credit defaulters.
Key to the success of any application, while not a guarantee, is proof that an applicant's salary has been paid into his or her account for a successive three month period. Any interruption, or faltering, in that cycle, warns Gavin is likely to solicit an immediate rejection, or require further supporting documentation.
Gavin, Broker/Owner of Durban North-based RE/MAX Panache says applications from self-employed people are currently being subjected to extensive scrutiny. He advises such applicants to be prepared to support their applications with reams of information and to be patient. He strongly recommends, given the importance of this requirement for supporting documentation, that purchasers should still see the benefits in service levels of using the more prominent mortgage originators.
Bank processing of applications is currently taking between 20 to 30 days with deposit requirements, and this depends on the actual value of the property, ranging between 10 to 30 percent of the value of the home.
Against such a steely backdrop Gavin advises sellers to seriously evaluate all cash offers, especially if the offered price is "reasonable" pointing out that three out of every five applications are currently being rejected by the major lenders. With the number of home loan defaulters increasing by the day he expects such steadfastness by the banks on their lending policy to continue in the short to medium-term, thus ensuring that cash purchasers will continue to hold the aces in negotiations.
But while loan grants may be seemingly impossible for some, he points out that buyers with generally unblemished credit records, in sound employment and with some form of cash deposit the banks are prepared to come to the party. Such a profile has formed the mainstay of his agency's good first quarter run of sales in the north of Durban residential areas. Gone however, are the days of large concessionary interest rates, with consumers generally now being offered rates above prime rate.
For the third successive month the agency has topped R40m in sales with nearly half coming from outright cash purchases. A main source of business is continued migration from the Berea , driven in the main by a desire to live in Durban North's family homes on larger plots and the central locality of the area in terms of accessing Durban CBD or Umhlanga. A further factor, according to Gavin, is the perceived good value of Durban North homes which start at around R1,8m and expectations of further good growth stemming from the low density of the suburb and its central location. His agency figures show that since December homes in Durban North have been selling on average at 85 percent of their asking prices. As a general rule of thumb, current prices are about 20 percent lower than 18 months ago.
Gavin reports also good activity in the area's main market entry of Umgeni Park in the price range above R750 000 and high interest in Umhlanga's one-bedroom about 50sqm apartments, which are selling from around R750 000. These, at the peak of the property cycle were being sold at prices approaching R1m.
Last week's interest rate cut he expects to stir up some interest among the wait and see market, but points out that, while welcomed, a market recovery of any note will not be led by further cuts, but by the banks loosening their taps on financing of home loans. Interestingly, in terms of his first quarter figures, if banks were still lending with their former willingness his agency's turnover would be more than 30 percent higher than current monthly sales volumes of R40m.

SOUTH AFRICA TO GET A WHOLE NEW TOWN

Statement
06 April 2009

Developer, community announce R1,3bn commuter town near Pretoria with 3 000 homes, shops, schools, clinics and parks.

A massive property development that will create a whole new town 22km to the north-west of Pretoria will shortly get under way on 450ha of land restored in 1998 to the Rama community that had been forcibly removed during the apartheid years.
The integrated development, dubbed Rama City, will take about 15 years to complete and will cost around R1,3bn in today's terms. It is being undertaken by professional developer Rama Horizon Developments in partnership with the Rama Community Property Association (RCPA).
The formation of this partnership is a groundbreaking move that could provide a development and resettlement blueprint for other communities that were victims of forced removals under the apartheid government and have now successfully reclaimed their land.
"This project," says RCPA chairman Hendrik Nhtite "will not only give the community access to about 3000 new homes, but will turn underused land into a new town complete with shops, schools, clinics, churches and parks that is within easy commuting distance of the employment opportunities in Rosslyn, Brits and Akasia. As such, it will be of enormous practical benefit to the Rama community.
"More importantly, the community is a full partner in the planning and decision-making process for the project, and an extensive training programme will ensure the transfer to the community of valuable skills, not only in the building and construction fields but in information, technology, design, communication and management."
The Rama City site is located just south of the Garankuwa hospital and Medunsa campus and is served by a railway line and a provincial road as well as regional bus and taxi nodes, so already has the basis of a good public transport system. It will be developed in phases, the first of which will be a residential area for the direct beneficiaries of the land claim.
This area will contain some 650 residential stands as well as a primary school, a middle and high school, a cultural centre and market, a community centre, a church, clinics and a series of parks with communal sports facilities. It is in an excellent position in relation to the new town centre that will be developed, which will create future wealth for its property owners.
The stands, set along paved roads, will be fully serviced and are already being allocated to the legal beneficiaries of the Rama Community. Meanwhile, provision has also been made for the development of apartments that can be rented to provide accommodation for those members of the community who do not qualify for grants or subsidies and who cannot afford to buy a home.