Increased lending positive for property market

May 2, 2018 10:54:48 PM Share this:
Statistics released by bond originator, ooba, in their latest "oobarometer" for the first quarter of 2018, reflecting banks increased willingness to lend money is fantastic news for the real estate market in South Africa.  

According to ooba  in the first quarter of 2018 they recorded the highest home loan approval rate in over ten years since the National Credit Act was implemented. With an increase of 4.9% compared to the first quarter of 2017.

These figures are certainly reflected in the market we're experiencing. This improved lending appetite will play a particularly important role influencing consumer confidence. After the market fluctuations and economic instability of 2017 the stabilization of 2018 thus far is reinforcing buyer interest and much needed investment activity. The current political climate continues to re-instill hope in the broader economy.

Another exciting sentiment shared by the report states that banks are increasingly more willing to lend the full value of a property without requiring a deposit. The average deposit over the entire market decreased by 6.4% year-on-year. For many first-time buyers the need for a sizeable deposit and stricter lending criteria implemented over the past few years greatly influenced the decision to buy. Having to apply for another loan to cover the deposit amount might put affordability of the home out of reach.

There are still corners of the market that remain under pressure and will continue to do so, however with the information emanating from ooba's report, both buyers and sellers are expected to benefit from this improved activity.

From a holistic perspective we're definitely dealing with a buyer's market, yet with banks letting go of the reigns more buyers will enter the market and create greater demand which ultimately leads to a far more beneficial environment for everyone.

Statement by
Richard Gray
Harcourts Africa Chief Executive Officer
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Topics: Richard Gray, Harcourts South Africa, Property Markets, Buyers market, Ooba

Harcourts International’s Todd Cassie named to CIO100 list

May 2, 2018 6:30:30 PM Share this:
Todd Cassie, Harcourts International’s Head of Technology, has been featured by CIO magazine as a member of the CIO100 list. The list annually honours the most innovative technology leaders across all industries who are at the forefront of decision-making and strategic change.

Mr Cassie said that it was an honour to be included in the list and credited the recognition to the team members at Harcourts for their dedication to excellence and unrelenting focus on leading the way in the industry.

“It’s always great to be recognised for the work you do, but it’s a team effort,” he said. “For Harcourts it’s recognition as a potential place to work for those that are considering a change and recognition that we have a dedicated tech function that is reasonably large and is working hard to deliver great customer outcomes.”

"The success of Harcourts International's technology projects greatly influence the South African business prerogatives. Technology development and the evolution of the real estate market to include modern technological feats is of utmost importance to us. Our key strategic departments work non-stop researching ways to greatly improve client experience, product delivery to target markets and office/agent communication. Mr Cassie has certainly been a pillar of leadership in these advancements,"  said Harcourts South Africa CEO, Richard Gray.

Harcourts International Managing Director Mike Green said, “Starting with examining how Harcourts delivers technology throughout the business to its internal team, the business owners, sales consultants, property managers and leadership, Todd’s vision has seen tremendous strides over the past year.”

Since joining Harcourts one year ago, Mr Cassie has led the process of change in the way the Tech Team operates, with team members in Australia and New Zealand, noting that efficiencies and capabilities were enhanced and streamlined.

“For me the greatest accomplishment this past year has been the Tech Team accepting the need for change and getting on with it. Our greatest challenge now is to keep up the momentum as we continue to make changes because it’s not always evident without an instant return for your efforts.

“Harcourts has a proud history of using technology to deliver innovations to the industry that dates to the late 90s,” said Mr Cassie, noting that Harcourts was the first real estate brand to launch a website in New Zealand in 1997.

“Although that concept seems obvious, at the time it was revolutionary, and you can imagine the difference in the technology 20 years ago.

“Our focus is and continues to be on our clients. By maintaining this focus, we have a perfect yardstick to measure ourselves against as we continue our development lifecycle.”

Mr Cassie has worked in technology for over 20 years across a broad range of industries in New Zealand, Australia, the UK & Canada, and is a member of ISACA and Deloitte CIO Roundtable. Most recently he spent the 12 years working with the Christchurch International Airport where, in 2016, he was named to the CIO100 list.

It was the draw of working with New Zealand’s #1 real estate franchise network that brought him to Harcourts, where he now oversees robust technology team servicing 10 countries across over 900 offices and 10,000 team members.

He noted that Harcourts was one of the first real estate brands worldwide to partner with Facebook and launch its enterprise employee engagement application Workplace by Facebook. By supporting initiatives and involving outside developers, the company has seen success in the early stages of the project.

“Finding new and unique ways to do things that gives us a competitive advantage, especially ones that other real estate brands aren’t doing and being first to the market is a different way of thinking,” said Mr Cassie.
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Topics: Technology, Harcourts South Africa, Harcourts International, CIO100 list, Innovative technology

Agricultural sector fertile with problems

Apr 16, 2018 6:35:51 PM Share this:

Drought takes severe toll on farming property market

The next few months will be testing for the Western Cape’s agricultural property sector as it struggles to stand steadfast in the face of unrelenting pressure from the ongoing drought, which has severely hit the region.

Some markets are already suffering declines while others are reported to be surviving the challenges.

All agricultural commodities in the province are struggling due to the water crisis. Carl Opperman, chief executive of Agri Western Cape, says damage is so far estimated at R14billion.

In the livestock sector, grazing and feed shortages have already resulted in massive culling, and harvest prospects for the deciduous sector are showing decreases in crop volumes. This is resulting in both the import and export markets taking strain.

“The industry is an important generator of valuable foreign currency inflow, which is now also under pressure. The estimate for the viniculture sector shows smaller crops than 2017. Grain yields have been far below average, with no yields at all in certain areas. 

“Agriculture’s water supply has been curtailed by between 60% and 83%. In the Lower-Berg River region, producers’ water quota has been depleted.  No water is available for the after-crop irrigation of orchards and vineyards, and this will have an effect on next year’s harvest,” says Opperman.

The drought is a major risk for the Western Cape agricultural economy.

This phenomenon has been a major factor in agricultural property performance in the parts of the country worst affected, especially the Western Cape, where it has “kept a lid” on prices over the past few years, says Joop Coetzee of RealNet Plotte & Plase. Despite this, demand for small holdings is “vibrant” and interest in large farms has “picked up”.

In addition, even though Coetzee says the agricultural property market was quiet in the last quarter of 2017, it has “revived substantially” since political and presidential changes.

Land claims have also been an issue in the market for years, but sales have not slowed since the Land Expropriation Without Compensation motion was passed in Parliament, he says, adding there has also not been a rush of owners wanting to sell farms.

“It remains to be seen if this scenario will change over the next six months, but there is a belief land reformation will proceed in an orderly, considered and legal manner so as not to threaten the country’s food security or the financial institutions that support the agricultural sector. Consequently we do not foresee a decline in interest. Serious farmers will always be interested in good land.”

Although the land reform proposals have not yet resulted in any noticeable reduction in interest shown in the larger commercial farms either, Daniel Joubert, agricultural property specialist at Harcourts Winelands, says the very dry conditions have had a significant impact on the market. This is because their value is directly related to irrigation water availability and supply volumes.

“Farms are sought after in areas with a good water supply as opposed to areas in which supply has been restricted.”

Joubert says, for the first time, agricultural water supply has been restricted in many areas this year. It has created a new baseline of water security on these properties and this is adversely affecting their desirability. Buyers in the commercial segment are focusing their interests on those areas not been affected by water restrictions, and this has led to properties in these areas being in demand.

Currently, the market for smaller lifestyle farms is also slow, says his colleague James Visser, attributing this to political uncertainty and widely-publicised farm security issues.

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Topics: Harcourts South Africa, Agricultural, Harcourts Midlands

Avoiding the impact of VAT on your property payments

Apr 10, 2018 9:24:49 PM Share this:

A lot has been said about the increase in VAT from 14% to 15% as announced by the Finance Minister in his recent budget speech. There are certainly many sectors that are going to feel the shift in tax, however it might be the man and woman on the street who will be hit hardest.

Unfortunately consumers are directly impacted by tax increases due to our participation in a multitude of industries. We’re economically active and as purchasers of an array of products and services we feel the knock on effects of the suppliers. Who have to make changes in order to buffer the impact on their businesses.

Undoubtedly for the tenant and home owner food costs, as well as recent petrol price hikes, will influence affordability and budgets. For some the VAT increase might only be a few rand, for others it could be thousands.

It is imperative that you start adjusting and analysing the potential impact different expenditure increases will have on your budget. It is always better to be prepared than caught by surprise and then being forced to make last minute changes.

By having insight into budget amendments you will have the advantage of adjusting certain payments to account for increases. Cut down on unnecessary and wasteful expenses so that you continue being able to pay your bills or even fortunately save a little every month.

If you’re renting - now might be the best time to consider purchasing a property. With interest rates cut by 25 basis points, bringing the repo rate to 6.5% and the prime lending rate of banks to 10%, your value on monthly property expenditure might be more in your favour if you buy now.

Statement by
Richard Gray
Harcourts Africa Chief Executive Officer

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Topics: Richard Gray, Harcourts South Africa, Financial Year End, Property Markets, Vat Increase

Repo rate good news for the property market

Apr 3, 2018 8:43:22 PM Share this:

The decision by South Africa’s Reserve Bank to cut its repo rate by 25 basis points to 6.5%, after the Monetary Policy Committee (MPC) meeting today,  Wednesday, March 28, will provide much needed relief to the consumer who is generally highly indebted. The knock-on affects of this rate cut should take the prime lending rate of banks to 10%. International ratings agency Moody's stable outlook for South Africa certainly influenced this decision by the MPC.

We believe this signals the turning point in the interest rate cycle. With the Rand relatively strong and inflation at its lowest level for several years, this is hopefully the first of a few cuts in 2018.

South Africans have experienced continuous economic pressures in recent times. Consumers have been in a price pinch with rising costs, increased taxes, heightened unemployment and economic instability.

So, in short, the repo rate cut is very good news. There will definitely be a direct impact on reduced repayments with regards to household debt. Furthermore, we predict an increase in consumer confidence and real estate demand over the short to medium term.

Increased consumer confidence influences a multitude of other markets and sectors and with increased economic activity from a holistic perspective South Africa's path to further economic stability becomes a closer beacon.

Creating favourable conditions for investors and buyers to enter the market is a priority. An environment conducive to financial and economic positivity ensures there are more entrants from a larger diversity of backgrounds. In addition, for those who are already active in the market this translates into higher investment returns and a far reaching trust in the country's economic stability.

Statement by
Richard Gray
Harcourts Africa Chief Executive Officer

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Topics: Richard Gray, Harcourts South Africa, repo rate cut, repo rate

Harcourts South Africa 2018 Budget Reaction

Feb 22, 2018 11:03:09 PM Share this:

Overall it was a far more balanced budget speech than initially expected, with a focus on rebuilding, which is in line with the newly elected President Cyril Ramaphosa's messaging. However, Finance Minister Gigaba's announcement that there will be an increase in VAT from 14% to 15%, the first time VAT has been increased since 1993, will undoubtedly have a direct impact on the property market. VAT is payable on the transaction of a home purchase and in some cases included in the price of the home. Although one percent seems like a very slight increase, transactions like high value commercial properties or development investments might feel the increase far more than that of the middle to lower end of the market.

There is no doubt Government is experiencing shortfalls in their budget and lending might tighten up, therefore accumulation of funds has to originate from taxes. South Africans experiencing a price pinch with rising food costs, fuel costs and tax hikes might continue to be under financial pressure as more increases can be expected. This was noted in the speech as a 22c/litre increase in the general fuel levy, and a 30c/litre rise in the Road Accident Fund (RAF) levy was announced. South Africans will also be paying 52 cents more per litre for fuel from April 4. The effect of these tax hikes impacts the man on the street in a direct manner, and this might have an effect on the rental market on the lower end.

Statement by
Richard Gray
Harcourts Africa Chief Executive Officer

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Topics: Richard Gray, Harcourts South Africa, 2018 budget, Cyril Ramaphosa, economical news

Green' homes demand set to increase in 2018

Feb 22, 2018 6:37:49 PM Share this:

There has been a significant appreciation for sustainable living in South Africa over the past few months as a major global city faces serious water challenges. The support by the private sector and residents has shown the dedication we as people have to the sustainability of our communities and families. The dire situation in Cape Town, which now has all hands on deck to avoid 'Day Zero' has showcased the demand for homes that are geared toward environmental preservation.

The global shift toward building green economies will continue to be a hot topic in 2018 and years to come. As we as societies start embracing the need for change in other aspects of our lives the importance of ensuring our foundation, our homes, are aligned with these practices will become more frequent. We see the evolution of new developments, residential and commercial building as well as home renovations changing the landscape of these industries. One such example was last year's Nedbank Corporate and Investment Banking (NCIB) first disbursement from an innovative R120 million Sustainable Affordable Housing finance facility that was put in place through the collaborative efforts of Nedbank’s Affordable Housing Development Finance division, and South Africa’s Green Fund.

In the affordable and low-cost housing segments we've already seen a major push by government to incorporate solar installations to homes. This obviously also is an attempt to reduce demand from the electricity grid which we've known has experienced difficulty in recent years.

There has certainly been an increase in demand for 'green' homes by first-time buyers. Our understanding implies that our younger audience have a greater desire to live sustainable lives and that paired with this innate need is affordability.  In a country where consumers often experience a price pinch between increased rates, input costs and expenses versus income, saving on home expenses can relieve a lot of pressure.

For South African property owners, the experience of power outages, environmental threats and escalating electricity tariffs make green solutions such as solar power a practical consideration. Although greening a building – whether building new or renovating – can be expensive, the savings in future operational costs invariably make the initial investment worthwhile.

Statement by
Richard Gray
Harcourts Africa Chief Executive Officer

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Topics: Richard Gray, Harcourts South Africa, Enviromental Concerns, Green Buildings, Solar Power, economical news

The emotional side of the property market

Feb 19, 2018 8:00:00 AM Share this:

The property market is often overshadowed by the investment intentions of sellers and buyers, forgetting the emotional aspect of purchasing a home for you and your family. The nostalgia many of us carry with us about our childhood home is often a major factor when buyers gravitate toward a suburb or particular home.

Jerry M. Burger, Ph.D.,a professor of psychology at Santa Clara University in the US, explains in his book -  Returning Home: Reconnecting with Our Childhoods, that "one's home is a part of personal identity for many people; i.e., an extension of their self. And it is during these early years that children develop a sense of self independent of their families. Homes also are almost always the place where children spend the largest part of their time, as well as the location for many of their most emotional experiences."

He further identifies that he was surprised by the depth of emotion many people feel for their childhood home. It is with this being said that it is incredibly important for property professionals to take these emotional elements into consideration when taking part in a financial transaction. 

We at Harcourts experience these sentiments on a daily basis, from both sellers and buyers. Sellers saying goodbye to a member of the family in a way and buyers yearning for a nest where all their dreams become a reality.

This is why a certain amount of finesse and understanding needs to take place. Despite the obvious large investment aspect and stress buying a home can bring upon, the human factor is a big part of it.

We believe that the true craft is the ability to combine all these facets, sound investment advice, in-depth market knowledge as well as the emotional aspects of the process.

At Harcourts our foundation is our Values system. An ethos we live by. A Mantra that ties us to our clients by building relationships, in order to understand the depth of the purchase.

Statement by
Richard Gray

Harcourts Africa Chief Executive Officer

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Topics: Harcourts South Africa, Tips for Agents, Property Markets

Zuma resignation will have a definite positive effect on the property market

Feb 16, 2018 5:50:22 PM Share this:

Former President Jacob Zuma's resignation yesterday evening propelled investor confidence back into positive territory. The Rand has already gained a lot of ground in the past few weeks and as it continues to strengthen it might relieve some of the price pressure the South African consumer has been experiencing.

There is no doubt that the political climate in South Africa and Government related activities have influenced our economy. Local investors as well as foreign investors, both buyers and sellers, have been gun shy in certain markets and at times apprehensive to invest, especially in the residential rental market.

Traditionally property defies a lot of the immediate reactions due to its long term nature, however the commercial and rental markets might react more sharply to these changes. There is also a good chance we'll see increased activity in flat markets and a renewed interest from buyers and sellers alike. When a stable and growing economy has the ability to set a tone that puts the activity in the market at ease opportunities are created from areas of the economy previously dampened by rhetoric and legislation amendments that threatened property ownership .

These shifts in Government have been received positively to a large extent by international markets, as we saw Emerging Market experts from Wall Street in the U.S. predict positive changes for South Africa. This will do wonders for our foreign investment market as perceptions and media opinions certainly influence the external view of local trading.

It is important to note though that there are still many political and fiscal challenges and by no means are we immediately saved by the former President's resignation. However, it is the optimism of a renewed commitment to growth and stability that South Africans so desperately need.

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Topics: Richard Gray, Harcourts South Africa, Property Markets, Jacob Zuma, Zuma Resignation

Economic stability facilitates growth

Feb 12, 2018 9:10:03 PM Share this:

The political climate in South Africa has been under the microscope in recent times as Deputy President Cyril Ramaphosa took over the reigns as leader of the ruling party. The Rand immediately gained traction in the days following his appointment and has remained positive since.

There appears to be a shift in political messaging with the intention hopefully being to restore confidence in our markets for foreign and local investors.

It is essential that Government avoid volatile political decisions that affect our economy and influence public economic perception. Despite Harcourts recording an incredibly successful 2017, many sectors of the property  market experienced stagnation and a decline in activity

There are many factors that influence buyers and sellers willingness to engage in real estate transactions, however, to a large extent buyers and sellers gauge potential success on general reports and opinions of the market, especially in an emerging market.

Real estate is an investment, and for most it will be the single largest investment of our lives, so it is understandable that we consider all the external elements before committing. This ideology spills over into other forms of investment too, especially commercial real estate, which assists greatly in business growth and entrepreneurship. When the private sector remains a little apprehensive to invest in real estate - business growth and employment are directly affected.

It is with this in mind that Government needs to aim for stability over the short term. Ensuring our markets remain steady enough to avoid fluctuations that either put our consumers under pressure with rising costs or deter extensive capital investment.

Statement by
Richard Gray
Harcourts Africa Chief Executive Officer

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Topics: Harcourts South Africa, Economy