Easy Ways to Save Money on your Property

As South Africans property owners dust off their heaters they will increasingly be looking at ways to lower household running costs.

Properties fitted with energy-saving devices are increasingly attractive to prospective buyers says Brendan Miller of Lew Geffen Sotheby’s International.

“At the turn of the century barring the odd ardent environmentalist, things like solar energy didn’t even register on buyers’ radars, but they’re most definitely there now.

“Municipal services have become prohibitively expensive and as the country’s infrastructure deteriorates the cost to consumers will increase. It therefore makes sense to become as green-powered and self-sufficient as possible; not only from an environmental perspective, but from a financial one as well.”

Lew Geffen Sotheby’s international director, Sandy Geffen, believes it is scandalous that the government, through the Department of Energy, last year chose to end the programme of rebates to incentivise home owners to install solar geysers. The programme was previously administered by Eskom, but was shut down almost immediately after being transferred to the Department of Energy in March 2015.

“An average family comprises three to four members, each bathing or showering once a day. Considering that heating a geyser accounts for 40 percent or more of a household’s monthly electricity usage, just getting everybody clean can rack up a large bill before you even start adding other power guzzlers like stoves.

“I believe it’s morally wrong on numerous levels, not least of global climate change.

“As a rule the only way most homeowners who have to cut down on their bills manage to fund the R15 000 to R30 000 required for the parts and installation – depending on the size of the geyser – is to dip into their mortgages or fall further into financial difficulty by taking out bank loans. Both scenarios are bad news for debtridden consumers, and in some cases their efforts to do the right thing ultimately see them go belly-up.”

Geffen says the only correct way to fund an installation is for home owners to save until they have enough in the bank to pay cash for the solar geyser.

“You’ll recoup the initial investment in less than four years, after which it’s pure electricity bill savings, and if you choose to sell your house you’ve added significantly to the value of the property if it already has a medium to large solar water heater installed.”

Miller says particularly in relation to larger properties, buyers are increasingly asking agents to source homes that have solar water heaters, solar panels, grey water irrigation systems, rain water tanks, comprehensive insulation or even double-glazing, which helps with climate control and dampening external noise.

“There’s no question that energy-saving home alterations and additions raise the value and desirability of homes that are put on the market, because buyers are increasingly asking questions like whether a property has one or two geysers, and whether irrigation systems are grey water or mains water.

“Fitting these systems will reward home owners with a significant return on investment in the short term in the form of savings on household running costs, as well as adding value to their properties in the long term.”

According to Geffen it’s possible to reduce a household’s energy expenditure by up to 70 percent using passive solar design. Tips include:

  • Replace a tin roof if you can, but if the budget is tight, insulate it and paint it white.
  • Natural materials such as stone, timber, thatch and clay are better at regulating temperature than most man-made substances.
  • Rooftop solar panels provide electricity to run low-consumption appliances such as televisions, radios and lights. A big enough spread of solar panels will even see your electricity meter running backwards for much of the day when it’s sunny, feeding power into the grid. You don’t get paid for this, but your bill plummets.
  • Home owners with gardens can reduce water usage by as much as 50 percent with a grey water irrigation system.
  • Install energy-efficient light bulbs which have a much longer life-span and use far less electricity.
  • Install window shutters, awnings or screens. These will cool rooms by keeping sunlight out of the home in summer.Property
    Weekend Argus (Sunday Edition)

    http://www.iolproperty.co.za/roller/news/entry/easy_ways_to_save_money

The Great Garden Debate – Does Size or Design deliver the highest R.O.I. for Seller’s

Cape Town urban garden


Having more space is often a primary motivator when people choose to buy a new home, and the quality of the outdoor environment is as important as the indoor environment if sellers want to maximize their return on investment.

That’s according to Lew Geffen Sotheby’s International Realty Director Sandy Geffen, who says sellers need to think of their outdoor space as they would a diamond.

“With a diamond size is always going to be important, but equally so is the quality of the stone. Severe flaws in a large stone will drag down its value and price, and the same goes for unkempt, unappealing gardens in a country like South Africa where we spend so much time outdoors”.

“In our experience if two similar houses are on the market in a particular area and the only real differentiator is the state of the garden, the vast majority of buyers will choose the property with the attractive outdoor space”.

“If you really lack a green thumb and you’re thinking of selling, it’s worth the expense of calling in a one-time specialist gardening service to at the very least neaten the grounds and put in a few attractive plants and pots”.

“If you’re prepared to stretch your budget a little further, consider some basic structural changes that – surprisingly – don’t have to cost the earth.”

Geffen says relative to the total property purchasing pool in the country, there is a small group of buyers at the top end of the market who seek out expansive estates with gardens that exceed 1 000m², and they have the financial means to properly maintain the grounds once they own them.

“These are the buyers who will, for instance, house-hunt in Constantia Upper in Cape Town, or in the older suburbs in the north of Johannesburg like Bryanston, where majestic homes are still plentiful. They want to purchase properties with vast, well-maintained grounds and they’re prepared to pay premium prices for the space”.

“By way of example, Propstats notes that the average sale price achieved for houses in Constantia Upper in 2015 was just over R10.3 million, with only 10 of the 78 sales recorded on the website being of plots less than 1 000m². By far the majority of the properties sold – 50 of them – were plots larger than 2 000m².”

But what outdoor spaces attract the most interest from the remainder of the buyers who comprise more than 90% of the overall South African market?

According to Geffen, the local answer is also the global trend: as cities densify smaller, interesting gardens that are easy to maintain and do dual service as additional living spaces are the order of the day.

“The catch-phrase that you see all over when desirable properties go on the market is ‘indoor-outdoor flow’, because functionality-wise gardens nowadays have to service many more needs than a patch of grass to kick a football and a place to park a car”.

“That said, in our experience buyers find the most attractive outdoor spaces to be relatively minimalist and sleek in design”.

“We live in a water-poor country so attractive indigenous, drought-resistant flora finds favour in terms of plantings, as do interesting pots. Among the newest trends internationally are miniature landscapes in pots and vertical gardens that make the most of the smaller outdoor spaces that are available to residents in urban environments. Potted vegetable and herb gardens are also very much on trend.”

But most important, says Geffen, is the nature of the “living space” a desirable garden provides.

“Extended patios with room to entertain, weathered multi-level decking with built-in planters and anything made out of sustainable material are right on trend internationally and also go down well with local buyers. Hard landscaping colours tend to be subdued to the point of monochromatic. And of course fire pits are incredibly striking because they create an appealing environment for outdoor spaces to be utilised all year round. “

Geffen says something sellers often forget is well-designed outdoor mood lighting, which can make or break the atmosphere of open-air entertainment areas. And this is an upgrade that shouldn’t be too costly, but adds a definite “wow factor” to a house.

“Gone are the days when a single lamp over the front door comprised the only lighting in your garden, no matter how big or small. Outdoor lighting is now very much a feature rather than a necessary evil and should be worked into a garden’s overall design plan.”

Geffen says while hard structural changes need to be carefully weighed up because they can be a substantial investment for a seller, this must be calculated against the potential increased return on investment when the property is eventually sold, “because the danger here is over-capitalisation”.

Geffen concludes: “The days of a facebrick driveway bordered by riotously coloured flower beds are a thing of the past if sellers want to make the most of their outdoor spaces and increase the value of their houses”.

“As far as modern gardens are concerned that will make potential buyers come back for a second viewing, sellers need to apply a slight twist to the KISS principle – Keep it Simple and Sleek, no matter what the size of the outdoor space”.

“Don’t pave over the whole garden, don’t let it become totally overgrown, try your best not to remove mature trees and add interesting visuals such as pots and feature walls that capture the imagination and make people want to spend time there. And whatever you do, if you happen to have a swimming pool ensure that it’s sparkling clean before any buyer comes to view the house!”

http://propertywheel.co.za/2016/05/the-great-garden-debate-does-size-or-design-deliver-the-highest-roi-for-sellers/

Moving Metros? It’s a Power Struggle

For high LSM families, with school-going kids, deciding to sell a Gauteng-based home to relocate to the scenic Western Cape is often an emotional decision. Jill Lloyd, area specialist for Lew Geffen Sotheby’s International Realty in Claremont and Lynfrae in Cape Town, believes that young families are drawn to the Western Cape due to perceived lifestyle benefits. “More and more people are drawn by the relaxed outdoor lifestyle, reliable municipal service delivery, and perceived safety of the Western Cape,” says Lloyd.

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, estimates that 30% of the company’s sales in Gauteng are on behalf of home owners relocating to the Cape. Geffen says that, although most are aware of the fact that homes are more expensive in the Western Cape, the actual disparity, when comparing like-for-like homes, is almost always a shock to those South Africans moving there from Gauteng.

It’s a numbers game, after allMOving truck

These are not just perceptions of the market players active in the Cape. According to the latest FNB property barometer, the Western Cape achieved a year-on-year home price growth of 12% measured over the last ten years, almost twice the national average of 6.8%. Despite this relatively higher price, Lew Geffen Sotheby’s International Realty reports that up to 40% of the home sellers from Joburg suburbs such as Blair Athol, and 25% of sellers in areas such as Hurlingham Manor and Benmore are selling to move to the Cape. Relocation from Tshwane is lower, however, with only about 10% of sales in sought after Tshwane suburbs such as Brooklyn being for the purpose of relocation to the Western Cape.

Before relocating to another city, be it for professional or lifestyle considerations, homeowners should remember to factor in all costs. Moving across provinces or even major cities entails significant financial as well as emotional costs for the entire family. But what about the monthly expenses such as paying for your municipal services? It is simple to look at the bond/rental cost of a home in Gauteng versus a home in the Cape Town Metro Municipality or eThekwini Municipality, and make a decision based on that. But, according to Chris Yelland, investigating editor at EE Publishers, and SA’s unofficial energy expert, public misconception of pricing for electricity tariffs is rife.


Wanna (almost) break up with Eskom?


“Domestic electricity customers have no choice as to who supplies them with electricity, because all electricity distributors – Eskom and municipal – are geographic monopolies,” says Yelland. “It is therefore important that electricity pricing between distributors should be equitable, rational, and non-discriminatory.”

Yelland adds that the reality is, though, that there is a wide variance of electricity tariff rates between municipal distributors.

This prompted us at HomeTimes to do some homework for those wanting to relocate. Is the grass really greener on all aspects, starting with electricity costs?Comparative electricity costs

We have investigated the electricity tariffs, effective from 1 July 2015 to 30 June 2016, for the six major metros in South Africa. For the purpose of comparison, conventional rates were used and the assumption is made that the household would be a medium residential energy consumer – that is to say usage of between 1,001kWh and 2,000kWh per month.

A household whose electricity is supplied by Joburg City Power is paying R1.2529 per kWh. Should this family decide to sell its three-bedroom home with two living areas, ample garden and two garages and move to a Cape Town property, which is on average 25% smaller for a similar, or even higher price, the family’s tariff may increase to R1.8763 per kWh.

Considering this, the family, assuming usage of 2,000kWh per month, may experience an increase in electricity costs from R2,505.80 per month in Joburg to R3,752.60 in their new home.

Tshwane priciest in GautengView of Tshwane from Fort Klapperkop

Nobody in Joburg likes traffic, so someone who finds their dream job in Ekurhuleni or Tshwane may be tempted to move across metros. This could mean an increase in a family’s monthly electricity bill of R341 (Ekurhuleni) or R798.20 (Tshwane) when moving from an area supplied by City Power. In this case, an individual would have to consider the costs of the daily commute – time and money – versus the increase in the monthly electricity bill.

The bottom line is relocation to another province or even city is a decision based on a variety of factors. As Geffen explains, home buyers wanting to relocate to areas such as the Western Cape must do their homework thoroughly to ensure that the right trade-off, to fit each lifestyle and pocket, is achieved.

http://hometimes.co.za/2016/05/moving-metros-its-a-power-struggle/

 

Bantry Bay- Darling of the Atlantic Seaboard

Bantry Bay vilBantry Bay, in recent years,  has overtaken Clifton and Fresnaye in terms of market performance.  The suburb’s share of 10 most expensive streets in South Africa increased from one in 2014 to three in 2015, this according to Lightstone Property Company’s 2014 and 2015 reports. The report uses highest median rand value to determine the 10 priciest streets, with De Wet Road (R22,2m), Arcadia Road (R20,9m), and Ravine Road (R20,7m) ranking seventh, ninth, and 10th respectively.

According to Fran Segal, Lew Geffen Sotheby’s International Realty area specialist, the average rate of return for houses in the suburb measured during 2015 was a nominal 16%. This is the return received before costs associated with sales and inflation, however, it is still an excellent performance considering the current economic climate.

This is where savvy investors stand to benefit according to Lew Geffen, chairperson of Lew Geffen Sotheby’s International Realty. “With entry-level prices now starting at around R10m, buyers looking for value will find it in the return on investment, especially if they are lucky enough to buy one of the area’s original homes.”

Geffen believes that, regardless of prevailing market conditions, investing on the Atlantic Seaboard will pay off as it is regarded as one of the most stable residential markets in South Africa.

http://hometimes.co.za/2016/05/bantry-bay-darling-of-the-atlantic-seaboard/

The Migration to Cape Town

Figures show that the migration of residents from the other provinces to Cape Town is steadily increasing, but many buyers are facing a harsh reality-check as they come to realise just how much more expensive property is on average in the Western Cape and how much less house they’re likely to get for the sale price they achieve upcountry.


LOCATION, LOCATION, LOCATION: Family homes like this beautifully renovated house in Lynfrae in Cape Town’s southern suburbs, on the market for R4.995 million, are very popular with upcountry buyers. It is a stone’s throw from several of the city’s best schools and a short drive from the CBD.

The reverse Great Trek – this time happening across the racial spectrum – has been steadily gaining momentum over the past four years, according to Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, who estimates that more than 30% of his company’s sales in Gauteng are on behalf of home-owners relocating to the Western Cape.

Jill Lloyd, Area Specialist for Lew Geffen Sotheby’s International Realty in Claremont and Lynfrae in Cape Town, says a few years ago the growing interest from upcountry buyers was merely an emergent trend making up a fraction of the local market.

“However, it has now become a steady flow which shows no signs of abating, as more and more people are drawn by the relaxed outdoor lifestyle, reliable municipal service delivery and perceived safety of the Western Cape.”

Lloyd says despite the migration becoming commonplace, she finds a significant number of buyers from other provinces are still surprised by the difference in property prices in comparable suburbs.

“Some people have a hard time coming to terms with the realisation that they have sold their mansion in Johannesburg but will only be able to afford a smaller, more modest home for the same money in Cape Town.”

Geffen agrees: “Although many people are generally aware that property is more expensive in the Cape, the reality can be a nasty shock especially when looking at homes in the most sought-after Cape Town suburbs, which have been realising record prices well above national averages for comparable homes.

“The latest FNB property barometer which includes the first quarter of 2016 has revealed that the Western Cape is once again the clear market leader, emerging streets ahead of the other provinces.

“Most notable is that, in contradiction to market forecasts of single digit growth in house prices, the Western Cape defied current trends last month by reflecting an impressive year-on-year price growth of 12% measured over 10 years, which is almost twice the national average of R6.8%.”

FNB Property Economist John Loos believes the Western Cape’s relatively superior residential market performance is due in part to its greater land constraint compared to, for instance, land-locked Gauteng. The perception built of the Western Cape as having a good provincial and Cape Town metro government, could have been another positive factor impacting on the house price growth, in his view.

“The same goes for the province’s combination of a good lifestyle as cities go, along with a strong services-dominated economy that provides steadily improving business and employment opportunity,” said Loos.

The report cites IHS Globalinsight, which estimates over the 10 year period from 2005 to 2014, the Western Cape achieved the fastest growth of South Africa’s nine provinces, narrowly ahead of Gauteng and KZN, averaging 3.4% per year.

Steve Thomas, Franchise Manager for Lew Geffen Sotheby’s International Realty in False Bay and Noordhoek, says: “Upcountry buyers will further feel the pinch as the Cape’s strong price growth is in sharp contrast to the subdued markets in KwaZulu-Natal (5.6%) and Gauteng (3%).”

Recent Lightstone reports also confirmed the Cape’s clear status as market leader when its research determined that Cape Town is not only home to seven of South Africa’s 10 wealthiest suburbs, it also boasts seven of the county’s 10 most expensive streets.

Thomas adds: “Ironically, Cape Town’s market strength is being boosted by the burgeoning number of upcountry investors who now account for up to 20% to 30% of buyers in the most sought-after areas, increasing during the peak of the summer holiday season.”

Vivienne Gottlieb, Area Specialist for Lew Geffen Sotheby’s International Realty in Sea Point, Green Point and De Waterkant says: “Not only are prices higher in Cape Town, but plot sizes are also generally around 25% smaller than the national average because of the limited available space between the ocean and the mountain.

“Areas near the ocean like False Bay and the Atlantic Seaboard are especially limited as the same topography that affords them their spectacular views also severely restricts the development.”

Gauteng agents of Sotheby’s International Realty report that up to 40% of the properties they list are put on the market because the owners are relocating to Cape Town.

Karen Bosman, Area Specialist for Lew Geffen Sotheby’s International Realty in Benmore, Hurlingham Manor and Parkmore in Johannesburg says that she has seen a notable increase over the past year, with around 25%of her sellers now migrating south.

“The majority are upper LSM professionals with school-going children who are seeking a better lifestyle for their families.

“Many of my clients travel to Cape Town regularly and are aware that they are not going to be able to replace the standard of home they enjoy in Johannesburg, but most feel that the trade-off is justifiable.”

Dermot McDermott, Dainfern and Blair Athol Area Specialist for Lew Geffen Sotheby’s International Realty, reports that up to 40% of his clients are selling their homes to move to Cape Town as well as other coastal areas.

“People are a lot more informed than they were four or five years ago and many realise that they have to move to areas outside of Cape Town’s market influence if they want to avoid major down-scaling.”

Pretoria residents appear to be less hasty to join the mass migration, with only around 10% of sellers in sought-after suburbs like Brooklyn and Menlo Park moving out of the province.

So says Karin Petzer, Area Specialist for Area Specialist for Lew Geffen Sotheby’s International Realty, who adds that most of her clients who move  Cape Town prefer to rent initially to allow them time to get to know the city before deciding on an area in which to buy property.

Charlene Leibman. Area Specialist for Lew Geffen Sotheby’s International Realty in Senderwood, Bedford Park and St Andrews, says: “We are also seeing an increasing number of migrating sellers retaining a smaller property in Johannesburg to accommodate husbands who still work in Johannesburg and commute weekly.”

According to Numbeo, the world’s largest database of user-contributed data about cities and countries worldwide, the cost of sectional title properties in Cape Town averages between 15% and 37% higher than in Johannesburg – depending on where you buy.

FNB’s estimates put the Western Cape as the province with by far the strongest net inflow of repeat home buyers from other provinces. In fact, since 1999 the province has had a positive net inflow of repeat buyers.

Loos suggests more people are moving away from Gauteng for lifestyle reasons: “The all-round popularity of the province (Western Cape), from both an economic and lifestyle point of view has seen it recording a strong net inflow of repeat home buyers, according to our own estimates.”

Concurrently there is a lack of repeat buyers leaving the Western Cape and those who do leave, mostly move to Gauteng for work related reasons, in Loos’ view.

“The Western Cape has developed a competitive advantage, which appears reflected in its having the lowest percentage of repeat buyers leaving the province (7.3% of total repeat buyers), as well as by far the strongest net inward migration rate of repeat buyers from other provinces.”

Loos believes the net inflow of repeat property buyers to the Western Cape has become nothing short of spectacular.

With the Western Cape’s market strength widening the gap between property values in other provinces, Geffen advises that thorough research is essential for upcountry buyers to achieve maximum bang for their buck.

“It is essential for relocating home seekers to do their homework before the final decision to move is even made. Property prices are higher in the Cape but there is still value to be found and, although the advantages of living here do outweigh the benefits of an extra reception room and enormous garden, comprehensive research will reduce the trade-off by determining which areas and property options offer the best value according to their needs.”

Geffen concludes: “I don’t foresee the growing influx of upcountry buyers abating any time soon as, over and above the lifestyle advantages, investors also benefit financially.

“Cape Town residential property values have consistently out-performed the other major centres in SA for a decade and it is now considered the most stable market in the country.”

http://www.myproperty.co.za/news/13077/The-migration-to-Cape-Town.aspx

The cost of the Great Trek to the Cape

Statistics reveal that the migration of residents from the other provinces to Cape Town is steadily increasing, with many of them facing a harsh reality-check when they realise just how much more expensive property is across most of the Western Cape and how much less house they’re likely to get for the sale price they achieve upcountry.

The reverse Great Trek – this time happening across all colour lines – has been steadily gaining momentum over the past four years, according to Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, who estimates that more than 30 percent of his company’s sales in Gauteng are for home-owners moving to the Western Cape.

Jill Lloyd of Lew Geffen Sotheby’s International Realty in Claremont and Lynfrae, says a few years ago the growing interest from upcountry buyers was merely an emergent trend making up a fraction of the local market.

“However, it has now become a steady flow which shows no signs of abating, as more and more people are drawn by the relaxed outdoor lifestyle, reliable municipal service delivery and perceived safety of the Western Cape.”

Lloyd says that in spite of the migration becoming commonplace, she finds that a significant number of buyers from other parts of South Africa are still surprised by the difference in property prices in comparable suburbs.

“Some people have a hard time coming to terms with the realisation that they have sold their mansion in Johannesburg but will only be able to afford a smaller, more modest home for the same money in Cape Town.”

Geffen agrees: “Although many people are generally aware that property is more expensive in the Cape, the reality can be a nasty shock especially when looking at homes in the most sought-after Cape Town suburbs, which have been realising record prices well above national averages for comparable homes.

“The latest FNB property barometer which includes the first quarter of 2016 has revealed that the Western Cape is once again the clear market leader, emerging streets ahead of the other provinces.

“Most notable is that, in contradiction to market forecasts of single digit growth in house prices, the Western Cape defied current trends last month by reflecting an impressive year-on-year price growth of 12 percent measured over 10 years, which is almost twice the national average of R6.8 percent.”

FNB property economist John Loos believes the Western Cape’s relatively superior residential market performance is due in part to its greater land constraint compared to, for instance, land-locked Gauteng. The perception built of the Western Cape as having a good provincial and Cape Town metro government, could have been another positive factor impacting on the house price growth, in his view.

“The same goes for the province’s combination of a good lifestyle as cities go, along with a strong services-dominated economy that provides steadily improving business and employment opportunity,” said Loos.

According to IHS Globalinsight estimates over the 10 year period from 2005 to 2014, the Western Cape achieved the fastest growth of South Africa’s nine provinces, narrowly ahead of Gauteng and KZN, averaging 3.4 percent a year.

Steve Thomas, franchise manager for Lew Geffen Sotheby’s International Realty in False Bay and Noordhoek, says: “Upcountry buyers will further feel the pinch as the Cape’s strong price growth is in sharp contrast to the subdued markets in KwaZulu-Natal (5.6 percent) and Gauteng (3 percent).”

Recent Lightstone reports also confirmed the Cape’s clear status as market leader when its research determined that Cape Town is home to seven of SA’s 10 wealthiest suburbs, as well as seven of the county’s 10 most expensive streets.

Thomas says: “Ironically, Cape Town’s market strength is being boosted by the growing number of upcountry investors who now account for up to 20 percent to 30 percent of buyers in the most sought-after areas, increasing during the peak of the summer holiday season.”

Vivienne Gottlieb of Lew Geffen Sotheby’s International Realty in Sea Point, Green Point and De Waterkant says: “Not only are prices higher in Cape Town, but plot sizes are also generally around 25 percent smaller than the national average because of the limited available space between the sea and the mountain.

“Areas near the sea like False Bay and the Atlantic seaboard are especially limited as the same topography that affords them their spectacular views also severely restricts the development.”

Gauteng agents of Sotheby’s International Realty report that up to 40 percent of the properties they list are put on the market because the owners are moving to Cape Town.

Karen Bosman of Lew Geffen Sotheby’s International Realty in Benmore, Hurlingham Manor and Parkmore in Johannesburg says that she has seen a notable increase over the past year, with around 25 percent of her sellers now migrating south.

“Most are upper LSM professionals with school-going children who are seeking a better lifestyle for their families. Many of my clients travel to Cape Town regularly and are aware that they are not going to be able to replace the standard of home they enjoy in Johannesburg, but most feel that the trade-off is justifiable.”

Dermot McDermott, Dainfern and Blair Athol agent for Lew Geffen Sotheby’s International Realty, says that up to 40 percent of his clients are selling their homes to move to Cape Town as well as other coastal areas.

“People are a lot more informed than they were four or five years ago and many realise that they have to move to areas outside of Cape Town’s market influence if they want to avoid major downscaling.”

Pretoria residents appear to be less hasty to join the mass migration, with only around 10 percent of sellers in sought-after suburbs like Brooklyn and Menlo Park moving out of the province.

So says agent Karin Petzer, who adds that most of her clients who move  Cape Town prefer to rent initially to allow them time to get to know the city before deciding on an area in which to buy property.

Charlene Leibman  of Lew Geffen Sotheby’s International Realty in Senderwood, Bedford Park and St Andrews, says: “We are also seeing an increasing number of migrating sellers retaining a smaller property in Johannesburg to accommodate husbands who still work in Johannesburg and commute weekly.”

According to Numbeo, the world’s largest database of user-contributed data about cities and countries worldwide, the cost of sectional title properties in Cape Town averages between 15 percent and 37 percent higher than in Johannesburg – depending on where you buy.

FNB’s estimates put the Western Cape as the province with by far the strongest net inflow of repeat home buyers from other provinces. In fact, since 1999 the province has had a positive net inflow of repeat buyers.

Loos suggests more people are moving away from Gauteng for lifestyle reasons.

“The all-round popularity of the Western Cape, from an economic and lifestyle point of view has seen it recording a strong net inflow of repeat home buyers, according to our own estimates.”

Concurrently there is a lack of repeat buyers leaving the Western Cape and those who do leave, mostly move to Gauteng for work related reasons, in Loos’s view.

“The Western Cape has developed a competitive advantage, which appears reflected in its having the lowest percentage of repeat buyers leaving the province (7.3 percent of total repeat buyers), as well as by far the strongest net inward migration rate of repeat buyers from other provinces.”

Loos believes the net inflow of repeat property buyers to the Western Cape has become nothing short of spectacular.

With the Western Cape’s market strength widening the gap between property values in other provinces, Geffen says that thorough research is essential for upcountry buyers to achieve maximum bang for their buck.

“It is essential for home seekers to do their homework before the final decision to move is even made. Property prices are higher in the Cape but there is still value to be found and, although the advantages of living here do outweigh the benefits of an extra reception room and enormous garden, comprehensive research will reduce the trade-off by determining which areas and property options offer the best value according to their needs.

“I don’t foresee the growing influx of upcountry buyers abating any time soon as, over and above the lifestyle advantages, investors also benefit financially. Cape Town residential property values have consistently out-performed the other major centres in SA for a decade and it is now considered the most stable market in the country,” Geffen says.

http://www.sapropertynews.com/the-cost-of-the-great-trek-to-the-cape/

Bantry Bay shines on the Platinum Mile

Bantry Bay’s quotient of Lightstone’s 10 most expensive streets in South Africa has risen from one in 2014 to three in 2015, which is understandable if you look at the rate of development and return on investment (ROI) the suburb offers.

That’s the word from Lew Geffen Sotheby’s International Realty agent, Fran Segal, who says: “When you measure the percentage of ROI, it’s easy to see why this sought-after suburb now features so prominently.

“Since the beginning of 2010 a total of 124 houses were sold worth a combined R1.615 billion and 314 apartment sales fetched R1.622bn with total sales for this period realising a hefty combined sales value of R3.237bn.

“Measured during 2015, the average percentage ROI for houses in Bantry Bay was a nominal 16 percent a year over eight years, which is an excellent return by any standard. Five houses were sold in this exclusive enclave last year, with their individual percent ROI varying between a solid 11 percent and a phenomenal 22 percent.”

In Lightstone’s 2014 report published in July last year, only De Wet Road made the cut into the top 10, but this year it was joined by Arcadia and Ravine roads which placed seventh at R22.25m, ninth at R20.975m and tenth at R20.675m.

Lightstone determines the highest valued roads selecting those with the highest median rand value rather than the mean value, as it eliminates extreme values which can influence the mean of a street. This therefore gives a good representation of the value of a street as a whole.

To calculate the value of the streets, Lightstone uses a valuation model based on repeat sales and comparable sales which takes inflation indices and applies them to a property’s previous sale price to bring the historic purchase price to current value.

Lara Kaplan of Lew Geffen Sotheby’s International Realty says: “For many years Bantry Bay was overshadowed by Clifton, and more recently by Fresnaye, when it came to market performance, but this has changed dramatically over the past two to three years.

“Deeds office figures from the beginning of January last year to date reveal that, alongside Bakoven, Bantry Bay achieved the highest average rand values for houses above R20m on the Atlantic seaboard during this period with six houses selling at an average price of R27.4m while eight houses in Bakoven were sold for an average of R27.8m.

“However, two unregistered sales in Bantry Bay of R48m and R34m during December and February will push the suburb into pole position with the average price increasing to around R30m.”

During the same period, three house sales in Fresnaye achieved an average sale price of R26.6m, followed by Camps Bay with five sales for R23.7m and Clifton with R21.5m for two sales.

Segal says: “According to Lightstone, the highest rand values achieved for house sales during 2015 were in Victoria Road at R35m, De Wet Road and Arcadia Road both at R29m and Ravine Road at R26.5m.

“They have also determined that only 21 percent (307 units) of the properties in Bantry Bay are single title houses compared to 1 178 sectional title units – with most in the luxury apartment blocks on the seaside of Victoria Road with panoramic sea views.”

Lew Geffen Sotheby’s International Realty Atlantic seaboard and City Bowl chief executive, Brendan Miller says: “Deeds Office records show that Bantry Bay has increasingly dominated this market in the blue chip segment of the Atlantic seaboard since 2010 with a 30 percent market share and 314 apartment sales to date achieving a combined value of R1.6bn.

“It’s closely followed by Clifton where 143 sales realised R1.3bn and Camps Bay at 222 sales fetching R1.045bn during the same period.”

Luxury apartments in Bantry Bay have proven to be an excellent investment and, measured in 2015 they outperformed houses with a nominal 18 percent ROI a year over eight years.

According to Miller, the suburb’s exponential market growth in recent years is especially evident when measured over the last six years.

“The Bantry Bay apartment market performed brilliantly during this period with the highest average nominal  ROI of 21 percent, followed by Camps Bay with 16 percent.”

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty says: “With entry level prices now starting at around R10m, buyers looking for value won’t find it in low prices but rather in the return on investment, especially if they are lucky enough to buy one of the original houses.

“This is where the true value lies for astute investors as a clever rebuild or revamp can bump up the value exponentially, realising hefty returns in a short time.”

However, such gems don’t often come onto the market considering that 55 percent of homeowners in Bantry Bay have owned their properties for 11 years or longer and 37 percent of the owners are pensioners.

Even though the market has stabilised in recent months due to the political turmoil and low rand, Geffen doesn’t foresee the suburb’s market strength waning soon.

“Overall, the Atlantic seaboard is very much at odds with the rest of South Africa in that the market is far less dependent on interest rate fluctuations and is regarded as one of the most stable residential markets in Cape Town.

“Bantry Bay’s prime wind-free position against the mountainside, spectacular views and its proximity to top class amenities will cushion this exclusive market even further.”

http://www.sapropertynews.com/bantry-bay-shines-on-the-platinum-mile/

Landlords beware – Maintenance skipping is never a saving

Entering the rental market can be an excellent investment, offering rental returns in the short term and capital gains in the long term. It’s also a great way to get one’s foot on the property ladder as the rental income will often cover a large portion of the mortgage repayments in the case of bonded purchases.

However, many an investor has come unstuck by miscalculating the costs and required cash flow of owning rental property which can quickly cause a sound investment to become a financial burden or even result in the loss of the property.

One of the expenses most often overlooked and not budgeted for is maintenance, which not only affects the monthly rental that owners can achieve but also the property’s value in the long term.

This is according to Lorraine Dellbridge, a Rentals Manager for Lew Geffen Sotheby’s International Realty, who says: “Landlords should afford their properties the same level of diligence as they would their vehicles, but many baulk at all but the most essential repairs which can prove very costly in the long term, if not sooner.

“Maintenance and repairs are not only for the benefit of the tenant but are crucial to prevent problems from escalating and resulting in expensive outlays in the future. It also protects an owner’s investment and ensures they will realise maximum returns when they decide to sell the property.

“Commonly ignored problems we see that have the potential to escalate include plumbing, guttering and drainage issues, which are usually minor initially but can often end up costing a small fortune.”

Dellbridge advises that the best way for landlords to avoid being caught on the back foot is to save a portion of the rental income each month so that they build up a maintenance fund and therefore have the money on hand when needed.

However, unlike fixed costs like rates and levies which are easily included in a budget, future maintenance costs cannot be foreseen, only estimated, and Dellbridge says that many landlords tend to exclude them from the budget and hope for the best, especially when the economy slows and belts need to be tightened.

“It’s in times like these that is especially important to continue to contribute towards a maintenance fund as the cost of unanticipated major repairs could quite literally break the bank.”

Arnold Maritz, Southern Suburbs Co-Principal for Lew Geffen Sothebys International Realty says: “It is also critical for owners to take out the best insurance policy they can afford and to take the time to research which company offers the most comprehensive coverage.

“Emergency repairs like burst geysers are not uncommon and can wreak havoc on one’s cash flow as they require an immediate outlay of up to R10 000, which few people have to spare.”

Maritz adds that disregarding or overlooking the maintenance of rental properties is not only a mistake made by investors who are new to the game.

“Landlords who have never lived in the properties they are letting are often unaware of potential issues that may require a watchful eye and this ignorance is easily exacerbated when they have long-term tenants who pay their rent on time and only ever communicate with the owners about major problems.

“Is it therefore advisable for landlords or their appointed agent to check on the properties a least once a year to see what maintenance needs to be done. They cannot just assume that the tenant is doing their part in the upkeep of their property or that they will notify the owner about potential problems as they arise.”

Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty says that it is essential that both the tenant and landlord have a clear understanding about who is responsible for which repairs and this should be fully covered in the lease document.

“Landlords or their appointed agent must always conduct documented incoming and outgoing inspections to keep track of damage to the property and also to catch and repair any budding issues before they become real problems.”

Geffen adds that landlords must also bear in mind that the tenant is a key factor in the upkeep of their investment and that their impact is two-fold.

“The better the tenants take care of a home and the more a landlord keeps tabs on their property, the less maintenance there will be. Landlords should work with their tenants, as happy lessees are more likely to look after the home.

“And, generally, the better the condition of the property, the higher the quality of tenants it will attract. This benefits the landlord in both the short and long term and averts myriad potential problems.”

Dellbridge says that these days it is advisable to use an experienced agent who not only has a thorough knowledge of the area, but also because the current Rental Housing Act has changed considerably in recent years and most tenants are now far more aware of their rights.

“Even if landlords prefer to handle their own rental properties, they should always seek the advice of an expert when drawing up the lease to ensure it is compliant with the rental legislation and that the lease covers all their responsibilities as well as those of the tenant.

So what is for the landlords account and what are the tenant’s responsibilities when it comes to maintenance and repairs?

Dellbridge says that the rule of thumb the landlord is responsible for the general maintenance of the property while the tenant is liable for any damage which is not caused by reasonable wear and tear and that this is where a thorough incoming inspection is invaluable to determining culpability.

“Tenants are also responsible for the replacement of items like light bulbs, fuses and tap washers and they are obliged to take care of the property and notify the landlord of any repairs that are needed.”

Maritz concludes: “Investors who are thinking of entering the rental market should always ensure that they have done their homework. They need to invest in an area where they will see a maximum return on investment, and minimise the risk of unforeseen financial pitfalls which could not only cost them their investment but also cause untold stress.”

http://www.cyberprop.com/Landlords_beware_maintenance_skimping_is_never_a_saving.crw

How will historical debt ruling impact the property market

A recent Supreme Court of Appeal (SCA) judgment confirmed a high court ruling that municipalities have a lien over a property for historical municipal debt incurred on it, regardless of who owns it at the time the debt is discovered. So how did this come about and what does it mean for your buyers and sellers?

Unless the Constitutional Court overturns the ruling, both buyers and sellers have been handed an additional headache in the already complicated process of concluding a property transaction.

Section 118 of the Municipal Systems Act exists to protect municipalities’ right to claim outstanding debt, explains specialist conveyancing attorney Elana Hopkins of Dykes Van Heerden Inc.

One mechanism created in Section 118 is a statutory lien over the property as security for the municipal debt incurred on it. This is a limited real right over a debtor’s property, which gives a creditor the right to sell the property in execution once the legal processes have been exhausted to collect outstanding debt, says Hopkins. This is what SCA ruling impacts: it confirmed that this security survives the transfer of the property to a new owner whether by private transaction or after a sale in execution.

“The Act also stipulates in Section 118(1) that a rates clearance has to be issued if the owner settles only the preceding two years’ outstanding debt,” says Hopkins. “And herein lies the problem as the property can therefore successfully be transferred without settling all the historical debt attached to it and in addition, the statutory lien will then survive such transfer.”

RAMIFICATIONS FOR PROPERTY OWNERS

The ramifications are serious for property owners, particularly if any municipality chooses to embark on a dedicated programme to recover historical debt, says Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty.

“Considering more than 325,000 properties change hands each year, this judgment could extend the already arduous sales process because buyers can demand full due diligence on properties before they’ll sign on the dotted line,” he says.

“For most buyers this delay would be preferable to having their properties serve as a security for potentially hundreds of thousands of rand of debt at some indeterminate time in future and for debt that they did not actually incur themselves.

“The other question is, of course, whether municipalities have the resources to cope with scores of additional queries related to historic debt, because many buyers and sellers will in future want guarantees. My feeling is ‘no’.”

Another problematic point, says Geffen, is that buyers who insist upon protecting themselves through a due diligence process might lose the opportunity to buy their dream homes in the current market in which stock shortages are the norm.

“Most sellers have more than one interested buyer and more than a handful will be willing to sacrifice slightly on price if it means the minimum statutory requirement of providing a two-year rates clearance certificate, rather than an onerous and extended due diligence process that could delay the purchase of their next property.

“In our experience, few owners start the process of selling their properties without knowing where they’re going once it’s sold.”

In the worst case scenario, there are also implications for banks, which potentially stand to lose vast sums because municipalities could perfect their security and take the proceeds of the sale of properties to settle outstanding municipal debts.

“Only then would any remaining funds be paid to the bondholder and thereafter to the owner. It wouldn’t surprise me if this court judgment causes lenders to review their risk profile criteria or revise downwards the amounts they lend,” he says. “Needless to say those who’d be most affected negatively would be self-employed people, who are already considered by lenders to be high risk even if they own stable, successful businesses.”

Hopkins adds that, in addition to doing a thorough due diligence investigation into the historical debt attached to the property (as suggested by Geffen), it’s also possible to seek a contractual guarantee from the seller that there is no outstanding debt apart from that covered by the clearance certificate.

The problem still remains that the seller might – innocently – be unaware of any outstanding amounts owed, particularly if the municipality’s records are not up to date when the property is transferred. This occurs especially where the property was rented and includes debt incurred by tenants who neglected to pay for municipal services.

NOT ALL DOOM AND GLOOM

It’s not all negative, though, because perfecting their security against a property for the collection of historical debt is a municipality’s last resort, explains Hopkins. The municipality still bears the burden of proof regarding the amount of the debt claimed and they are still legally obliged to collect the outstanding debt from the person who incurred it.

She adds that it remains to be seen if municipalities will make full use of this interpretation and it is also doubtful if they still have all the historical records or even have the resources to engage in an undertaking of such magnitude to recover historical debt.

“In the Western Cape we do not often see sellers insisting on only paying the last two years of municipal debt to obtain a clearance,” says Hopkins. “Furthermore, the Water Bylaw in the City of Cape Town, has in my opinion gone a long way in making sure that water meters are registering correctly as a statutory requirement during the transfer of a property, as a plumbing certificate is required when a property is transferred, which specifically certifies that the water meter is reading.”

She concludes that this decision is likely to come before the Constitutional Court as the case raises questions regarding the constitutionality of section 118 (3) of the Act, but in the interim suggests the following clause is included in sales agreements to protect prospective purchasers contractually against the effect of this ruling:

The seller shall obtain the necessary clearance certificate from the relevant local authority in terms of Section 118(3) of the Municipal Systems Act 32 of 2000 (as amended). The seller hereby warrants and acknowledges that once the necessary clearance certificate figures have been obtained from the relevant local authority, full payment of the outstanding debt shall be made and shall not limit such payment in terms of Section 118(1) of the Municipal Systems Act (as amended) to an amount equal to the outstanding figures for a period of 2 (two) years preceding the application for rates clearances. The seller hereby indemnifies the purchaser against any claims, which may arise from the aforementioned.

http://www.propertyprofessional.co.za/how-will-the-historical-debt-ruling-impact-the-property-market/

Mowbray and Rosebank Enjoy Unprecedented Demand

For many years the eclectic suburbs of Mowbray and Rosebank were regarded as the stomping ground of students and bohemian artists, with lower property prices than the rest of Cape Town’s southern suburbs and a slower market clearly reflecting this attitude.

However, nowadays it’s a very different scenario, with property values increasing rapidly and demand so strong that homes spend very little time on the market.

This is according to Tina Malyon of Lew Geffen Sotheby’s International Realty, who says: “A decade ago, the median house price in Mowbray was a very affordable R835 000 and in Rosebank it was around R1.1 million. It often took months to sell a property, with some homes remaining on the market for more than six months.

“As demand for property in Cape Town spiked and prices in these suburbs followed suit, investors began to realise the value they offered and a steady nominal escalation of 11 percent a year in both areas took the average house price in Mowbray to R1.43m and R1.85m in Rosebank in 2010. By 2015 the average house price was nudging R3m in Rosebank and almost R2.4m in Mowbray.”

Spurred by the expanding student population, apartments fared even better, with the average price in Mowbray steadily increasing from R340 000 in 2005 to around R1.1m by the end of 2015 and in Rosebank the modest 2005 price of R600 000 rocketed to R1.535m.

Malyon says the current demand far outstrips supply and most of the properties she lists are now snapped up almost immediately, frequently at the listing price and sometimes for more.

“I recently listed five properties in Mowbray and sold two of them within the first two weeks. One was a house in Clifton Road which was sold for R2.9m and the other in Belmont Road fetched R2.65m.

“We are also seeing more activity at the upper end of these markets, with the top prices nudging upwards.”

Since the beginning of 2015 to date, 13 houses were sold in Mowbray for a combined value of R24.41m, with four being in the R2.5 to R5m price band and in Rosebank 14 sales during this period realised R52.1m with five in the suburb’s upper price band of R5m to R10m.

Despite the surge in sales and property values in these two suburbs, they are still very accessible in terms of pricing in the southern suburbs. They offer excellent value for money in the area, and are also closer to the CBD than suburbs such as Claremont, Tokai or Constantia.

These two drawcards have been key driving factors in the change of the buyer demographic, which is now dominated by professionals and young families who are replacing the avant garde artists and aspirant authors.

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty says the influx of these new investors has pushed the Living Standards Measure  of the area up to 9 (on a scale of 1 to 10) with the average monthly household income now in the R24 000 to R37 000 bracket.

“This is also reflected in the growing percentage of residents who have owned their properties for less than seven years. They make up 33 percent. of the population and 60 percent of residents are under 49.”

Both suburbs also have very active rental markets, with around half of the purchases now being investment buys.

Arnold Maritz, co-principal of Lew Geffen Sotheby’s International Realty in the southern suburbs, says aside from the pool of young professionals and families wanting to rent property in these suburbs, the lack of student accommodation available in the vicinity of the University of Cape Town has been highlighted in news reports for months now.

“There are more than 27 000 students at UCT and fewer than 7 000 beds available in the university’s official residences. More than 20 000 students therefore need to find off-campus accommodation, which is why Mowbray and Rosebank are such attractive suburbs in which to buy investment properties because tenants are pretty much guaranteed.

“There are many parents with the means to either rent decent accommodation for their offspring, or even buy an investment property for the duration of their children’s studies, because they know at the end of the day there is a profit to be made when they sell.”

Although very similar in character, the property landscape does differ between Mowbray and Rosebank. In Mowbray 69 percent of the properties are freehold and in Rosebank the converse is true with sectional title homes dominating at 68 percent.

What they have in common is their lively cultural mix, eclectic array of retail and entertainment amenities and the dominance of Victorian architecture, with many of these homes now having been tastefully restored.

Mowbray and Rosebank also enjoy the benefit of being conveniently situated. They are just a short drive from the city centre and a stone’s throw from numerous good local schools, excellent medical facilities and retail offerings.

http://www.sapropertynews.com/mowbray-and-rosebank-enjoy-unprecedented-demand/