Insuring a home is often seen as a necessary hassle. Invariably required when taking out a home loan, home buyers (and especially first-timers) will sign the necessary forms, make the required payments and move on to more exciting things, like interior decorating and laying out a new garden.
In any event, insuring is now a quick and easy task, done with a phone call to a call centre and a short conversation can set you up.
But partly for these reasons, home-buyers do not always give their insurance the attention it deserves. Believing that they are “covered”, they do not review their policies periodically, and may even not bother to study the documents that they are sent.
Mistaken or poorly understood choices may well cause problems down the line. Insurance practitioners warn that probably the most common (and damaging) error is a failure to distinguish between market value and replacement value. The former refers to what the property will sell for; the latter to what it can restored to its original condition. Replacement values are typically substantially higher than market values, and if the property suffers an unthinkable catastrophe – being burned down, for example – such cover if what will be needed!
It is also important to specify particular features, especially where they are expensive and contribute greatly to the property’s value. For example, it is worth making sure that the policy included provision for those imported tiles or expensive wooden panels. Also, a thorough check of the policy is a good idea whenever a significant change has been made to the property, to be sure that the new features are in fact covered.
Beyond that, checking on the risks that the policy protects against is important. Depending on the surroundings and circumstances of the property, very unique risks may exist – say animal damage, or the prospect of land subsidence. These should never be ignored.
An insurance policy for fixed property, in other words, needs to ensure that things can be returned to what they were before disaster struck. As agents in an industry built on long-term relationships, there is little that depresses us more than to hear that one of our clients has suffered a major loss to events beyond his or her control. That is why we urge our clients to keep their policies up to date and relevant to their needs. As our lives change, so will our needs, and so too should our insurance cover. So be proactive! Ask “what-ifs”. Phone the call centre or your agent toc heck on what your policy will cover.
Ultimately, it is something that could save you vastly more than the time and premiums you invest in it!
Concerns about what the new administration could mean for South Africa have been raised since the election in November last year. The rand fell sharply on the announcement of the
However, many observers have indicated that a more pressing issue at present is the lack of clarity of President Trump’s policy direction, especially regarding economic policy. Initial indications appear to suggest a more protectionist
The withdrawal of the US from the Trans-Pacific Partnership trade agreement is probably the clearest manifestation of this.
The prospects of further volatility in the global trade system will be bad news for our economy, dependent as we are on capital inflows to balance our national accounts. It is unclear – though unlikely – whether South Africa would be directly hit by any protectionist measures, but the impact of diminished trade across the world would place greater strain on our prospects.
However, since South Africa’s economic relationships with
The implications for the property industry are ambivalent. The possibility of another slowdown will have a particular impact on the less affluent parts of the market. After the stresses that have defined the past few years, this would be doubly unwelcome.
On the other hand, a well-chosen property investment is a great hedge against
Ultimately, property agents and buyers need to remain watchful but optimistic. Prudent planning for the long-term is important – exercising patience through the tough times being a central element of success.
Topics: Donald Trump
2016 was a difficult year for the property industry. This much is apparent from data on South Africa’s housing market – and it is not clear whether 2017 will be any better. But it also underlines the need for strategic thinking on the part of both buyers and sellers, since opportunities can exist in the most unlikely of environments.
If more evidence of the challenges confronting South Africa households was needed, data released last week by Stats SA provided it. With both consumer inflation and the unemployment rate up, the difficulties that many South Africans have in paying their bills seem set to intensify. This will reverberate through the country’s property market.
Rising consumer inflation points to the most immediate problem. At 6.4% for October, it is at its highest level in eight months, and above the Reserve Bank’s target range of 3% - 6%. Most seriously, inflation has been driven in large measure by the rise in food prices, which have risen by some 12% over the past year.
A consequence of the drought, rising food prices will hit lower and middle-income households particularly hard, since food represents an increasingly large portion of their income, and one not easily reduced.
South Africa’s unemployment rate, meanwhile now, sits at 27.1%, the highest level in 13 years. This points to what is arguably the most persistent and debilitating problem confronting the country – the inability of millions of people to find work.
Together, these two factors are putting a particular squeeze on the South African property buyers. This confirms large volumes of industry data and our experiences as property agents. Lower-income buyers are finding it increasingly difficult to service their home loans as their incomes are stretched. The difficulties of finding work mean, for example, that households might be depending on one income, where two would be optimal.
Even more affluent buyers are under pressure, sometimes being forced to liquidate investments or purchasing smaller properties than they might wish for.
However, not all is pessimistic. South Africa’s rising unemployment rate masks the fact that between the second and third quarters of 2016 over a quarter of a million new jobs were created. The rise in the unemployment rate owed much to greater number of people seeking work. While this does not address the severity of South Africa’s unemployment malaise, it does demonstrate that there remains some dynamism in the economy.
South Africans are waiting anxiously as economists are predicting a 40% chance of downgrade from S&P at the end of the week.
Moreover, the Reserve Bank did not hike rates, meaning that property buyers will be spared the increases that this would have implied.
Concerns were expressed about the direction South Africa is moving in, but for now we have gained some valuable breathing space. It is crucial that we as a country use it.
Data released by FNB in its latest Property Barometer explains that the volume and value of sectional title transactions have significantly increased since 2010 after the dip in the 2008/9 recession. What is even more remarkable is that FNB states that sectional title transaction volumes have risen to 29.94% of total property transactions by individuals by the 3rd quarter of 2016.
Topics: Sectional Title Properties
Though an agent’s reputation is an important consideration, there’s more to it than that. Being an agent is very much about forging and maintaining relationships. However well-regarded an agent is, the quality of service depends on how well they can match the client’s personal needs.
In our experience, two factors are key to this. The first factor is expertise. A good agent needs to have a finger on the pulse of the local property market. He or she must understand how property value is determined in a dynamic market, and know what it takes to market a property for optimal returns. It’s also important for agencies to offer its agents industry-leading training and technological support to sharpen their competitiveness in the market.
The second factor key to matching a client’s needs is enthusiasm. A good agent is one who enjoys relationship-building. He or she will communicate conscientiously, and explain the opportunities and limitations that a transaction faces – and will look for means to improve its prospects. Perhaps more than anything, a good agent enjoys their work and draws satisfaction from doing it, not just the rewards it offers.
This is largely a question of values. You need to build a culture that rests on four principles: people first; doing the right thing; being courageous and fun and laughter. Rather than seeing enjoyment, ethics and fulfilment as incidental or even supportive of our work, we see them as fundamental.
This is an important and unique value proposition offering a culture of long-term relationships. It stresses rewards both in personal contentment and financial prosperity – each supporting the other.
Dealing with your clients to ensure that their experience provides the same rewards, and the foundation for a mutually beneficial long-term relationship, is a priority.
Harcourts Africa Chief Executive Officer
Topics: choosing the right agent
Last week’s Medium Term Budget Policy Statement (MTBPS) was unsettling news for homeowners struggling to keep up with their bond payments. Concerns are quite rightly on the rise about mooted tax hikes. But the bigger picture may be a little more positive than they seem.
Newly released data, outlining the dynamics of South Africa’s construction industry, provides an informative perspective on the of the real-estate chain by tough economic times – and also indications of optimism and resilience.
Stats SA’s new private sector building statistics presents data collected by the largest municipalities in the country for the first eight months of the year (January to August 2016).
South Africa’s economy continues to shed jobs, placing its workforce under considerable pressure. This will inevitably introduce additional strains into the country’s property markets.
Released last week, Stats SA’s latest Quarterly Employment Statistics assesses the state of the formal, non-agricultural sector in the second quarter of the year (in other words, between April and June). It is the key measure of the state of employment in the country. It revealed total employment of 9 218 000 people in this part of the economy over this period. In the first quarter of the year it recorded 9 285 000 – which meant that South Africa had shed some 67 000 jobs over this period.
Hardest hit was the community services sector – government, health, education and recreational services, for example – which shed 48 000 jobs. Manufacturing, trade, transport and mining showed smaller declines. Construction added a modest 1 000 jobs.
Measured over the longer term, the economy has added a little over 30 000 jobs since June 2015 (when total employment stood at 9 188 000), but has seen a significant decline since the recent highpoint in December 2015 (9 288 000).
These numbers suggest continued economic turbulence impacting on the livelihoods of a many South Africans. This adds a worrying dimension to recently released data from the Association for Savings and Investment South Africa and from Old Mutual’s Savings and Investment Monitor – which suggested that stressed households were dipping into savings or minimising their bond payments.
The hardest hit are likely to be those in the lower and middle-income groups, whose reserve funds are smallest, and who rely heavily on their paychecks to meet their living expenses. The prospect of defaults on bonds and declining sales in this part of the market are very real.
On a positive note, the slight increase in employment in the construction industry, demonstrates an encouraging resilience, indicating some buoyancy in the property sector – and also highlighting its critically important role as a creator of employment in the current difficult economic environment.
Security is a foremost concern for many if not most homeowners in South Africa today. Fences and walls surrounding properties have become a common feature today. What do they mean for a property’s value and saleability?
Fencing and walling for security purposes began in earnest in the 1980s, and gathered steam ever since. Worries about crimes affecting home spaces are real. For many buyers, a security fence or wall (not merely a boundary demarcator) is a non-negotiable.