HEIBERG ESTATES NEWSLETTER: FEBRUARY 2022
Dear Property Partners
Our Property Market remains to be resilient in spite of, yet another .25% interest rate increase announced earlier this month, increasing our prime lending rate to 7.5%. Buyer’s interest has taken a knock and is although moderately, visibly tapering down across all price ranges. Also, developers are putting on the brakes. The motto is: “rather safe than sorry”, especially since further interest rate increases seem to be inevitable and widely expected for times to come. This in turn will again stimulate more interest in rental properties. However, we can also recognise the fact that our still fairly low interest rates and favorable bank lending conditions, will continue to stimulate buyers’ interest which is expected to remain fairly optimistic for 2022.
Looking at the SONA 22 speech from a property perspective, the fact that it seems that Government recognizes how vital the recovery of our battered economy, the creation of sustainable jobs as well as business and consumer confidence is, is indeed a light in the long tunnel that we have been forced to walk through for some time now. Drastic measures have to be taken to also expand our tax base in order to give some stimulus to our empty state coffers that is causing huge limitations with government in its quest to create sustainable jobs, expand infrastructure and ensure basic monthly service deliveries from our battered Municipalities, especially in our rural areas. More like ever before, we need fundamental property investment security and long-term investment trust in our Real Estate Market across all sectors in order to stimulate ongoing movement.
The commitment given during SONA 2022 to the private sector regarding public-private partnerships to stimulate our economy and to enhance sustainable job creation that will also positively result in a greater base that can afford property investments, was a step in the right direction. Especially in specific referral to the construction sector that is one of our biggest job creators and in specific referral to much needed property developments in the lower- to medium price ranges.
President Ramaphosa who reaffirmed his commitment to land redistribution but in a secure and well managed process within Section 25 of the Constitution stipulations, was also well received within the property fraternity.
URGENT NOTIFICATION TO ALL HOMEOWNERS:
Kindly note that all homeowners on selling their property, must be in possession of updated, approved and stamped property plans by their local municipality. These plans need to be presented to the Bank Institution where the Purchasers loan has been approved as well as to your Conveyancer before date of transfer. Most banking institutions these days demand these approved, updated Municipal plans upfront before they are willing to deliver guarantees for transfer. Trying to get plans drafted and approved can take six months or even longer, severely delaying the selling/transferring of your property with the prospects of losing good Buyers as well. So, it is wise to pro-actively make certain that you indeed are in possession of updated and approved local Municipal building plans. The law stipulates that it is the responsibility of the current registered owner – irrespective if at the time when he/she bought or presently should there be no plans available for whatever reason – to deliver updated, municipal approved building plans on request to the Purchaser, Financial Institution or Conveyancing Attorneys.
Also note the new compulsory “PROPERTY STATUS DECLARATION” document whereby all latent and patent defects are outlined for approval and signature by both the Seller as well as the Purchaser and needs to be attached to the Sale Agreement. This document also needs to be handed to the Conveyancer before lodging into the Deeds Office for transfer.
Also note that for any Agent to earn commission, it is compulsory that both the Agent and its Agency, will be in possession of a Fidelity Fund Certificate (FFC) that must be presented to the Seller or Conveyancer on request.
Some of the latest interesting facts and statistics, as follows:
- A recently published FNB Commercial Property report, points out that rising capitalization rates in the Office and Retail Sectors, will continue to put downwards pressure on valuations, especially looking at the Office Sector with its continued very high vacancy rate and declining rentals. The Industrial Sector still remains to be the star performer and it is expected to continue this upwards trend for the remainder of this year.
- Interesting to note that retail property tenants were worse off than office- and industrial tenants during the 2020 hard lockdowns – 66% of tenants were in good standing regarding their rental payments by July 2021 (a huge improvement from the 41% recorded in May 2022), but it remained well below the 77% recorded prior to lockdowns in March 2020.
- We all are aware how the “normal” way of working from an office space has been changed over the past 2 years, and a recent FNB report anticipated that the Office Sector will continue the trend where smaller office space requirements and occupation, will grow in popularity. In the 5-year period up to 1990, the square meter space of office space built amounted to 34.6% of total stock built in the 3 major Commercial Property Sectors (Retail, Industrial and Office), whilst in the 5 years leading to 2021 this share has already declined to 22.1%!
- Despite the upwards trend in our interest rates, Buyer activity do remain to be positive as clearly illustrated by the fact that Deeds Office registrations increased by more than 11% for the six months ending November, and the favourable Buyers’ market is expected to continue for the remainder of the year due to low economic growth, high inflation and continued downwards pressure on house prices.
- The average house price increase recorded last year of just over 5%, was the best recorded since 2015 when it was just below 6%.
- It is still alarming to observe that such a huge percentage of Sellers, are selling their properties to emigrate, where this figure is presently estimated at 8% – up 1% compared to a 2nd quarter 2020 FNB report. This trend increased to 11% in the R3.6m+ price range and to 14% in the R2.6m to R3.6m price ranges nationally.
- The FNB Property Barometer for February 2022 shows that residential property sales prices were in average 3.6% higher than a year before, but lower than the 5.1% year-on-year growth recorded in April last year.
We all are aware that economic growth is a critical driver of the property sector, but not to leave out of sight just as important the recovery of business- and consumer confidence, in turn stimulating the attractiveness and security of long-term investments like property. Our country needs both local- as well as foreign investor trust in its property market, which will not happen if fundamental property rights and private ownership are not protected. Property is recognized as one of the most important contributors to our economy through the raising of mortgages/bonds, residential and commercial investments, huge monthly property tax payments made to local municipalities, job creators in the construction sectors, etc. and as a sector as a whole, contributes in a huge way to our state coffers. And as such, it plays a critical role in our yearly BBP.
We remain to be cautiously optimistic for the remainder of this year, there will always be a demand for properties, and excellent property opportunities is still presenting itself – visit our website at www.heibergestates.com or merely put your camera on our QR Code and click:
Please call us 24/7 to assist in any property related matters – we are there for you!
Our very best and warm wishes.
Sincerely
Bambie & Heiberg Estates Team
