HEIBERG ESTATES NEWSLETTER APRIL!

RSA 2019 GENERAL ELECTIONS – HOPEFULLY A NEW DAWN…

NEWSLETTER 4

Dear Property Partners!

The fact that again this month we were granted some grace and breathing space regarding a potential rating downgrade by Moody’s, keeping our sovereign debt at investment grade, was a welcome reprieve for our economy but especially for all involved in our SA Real Estate. A downgrade to Junk Status would have had all around severe consequences of which one most probably would be, immediate interest rate increases which would have been a further blow to our already very fragile property industry and as well as added to day-to-day rising living costs across the board. It is clear that our housing market continues to be under pressure by our prolonged depressed macro-economic environment.

A huge capital outflow of hundred billions of rands resulting from a downgrade as well as a direct consequent deterioration of our exchange rate and the value of the rand, would severely impact on much needed sustainable job creation efforts and further restricting people’s ability to afford houses. We need support throughout our whole economic spectrum to bring hope to about 37% of our unemployed population, but also to expand our very thin tax payers base where presently more or less 80% of all taxes, are being paid by a mere 20% of our population.

At least we have been granted some breathing space until after the soon to be elections in May, so that President Ramaphosa can make hard decisions and get our economic and fiscal house in order, improve efficiency and accountability in our public service and enhance development of key business infrastructure. Also to appoint a well-merited and creditworthy Cabinet in order to restore investment trust, as well as pave the way for our future political stability and establish future economic direction. The composition of the new Cabinet and the appointment of new Cabinet Ministers, could be the difference between a new economic boom and an economic bust…

A further silver lining to the under pressure SA Real Estate Market, came when the SA Reserve Bank recently announced on the back of a favourable 2019 inflation outlook and a moderate economic recovery, that the repo rate remains stable and unchanged at 6.75% – leaving our prime rate at 10.25%. With property prices moving sideways with low single figure year-on-year price increases and under some circumstances even price decreases, the very competitive Buyers’ Market is for the foreseeable future, expected to hold it status quo with excellent investment opportunities not seen for a long time, up for grabs. (Please refer to our website www.heibergestates.com to view great property investment opportunities).

Some of the latest interesting facts and statistics related to the SA Property Market:

  • The latest statistics as released by FNB’S Residential Property Barometer, show that the House Price Index y/y in March was 3,8% versus 3,7% recorded the previous month – in comparison to the first quarter statistics recorded last year, this showed an increase of .6%. As the trend continues, once again Cape Town and Nelson Mandela Bay outperform SA’s national average, where price growth of 7.5% and 5.3% respectively, was recorded.
  • With the basic cost of living ever increasing, the trend of financial challenged consumers is evident with demand for properties for sale, still declining and supply increasing – prolonging the Buyer’s market scenario with ample properties to pick and choose from in all sectors of our pressurized property market.
  • Positive to note is that that first-time buyers accounted for 52% of all mortgages extended by ooba in January and February this year – a fact also reflected in consistent good sales in sectional title units. In general mortgage advances are gradually on the increase where y/y by the end of February this year, it increased by 4, 1% – the highest increase in 31 months.
  • The International Monetary Fund lowered SA’s projected GDP growth rate for this year from 1.4% to 1.2% vs the SA Reserve Bank who also lowered their outlook for this year from an initial 1, 7% to 1.3% – still at least better than last year’s 0.8% but not closely near to the 5% growth according to our National Development Plan, we desperately need to reduce poverty and to increase sustainable job opportunities. This also directly impacting on people’s income and to afford to invest in properties.
  • With Moody’s keeping its credit rating stable, the next hurdle comes with Standard & Poor that will make their announcement public on 24 May regarding their assessment of SA’s credit rating, keeping it stable at Junk status (BB) for the past two years. At this stage economists belief that it will not change the credit rating and should our economic growth rate not increase to at least 2% or more, no upgrades will be possible.
  • Alarmingly, the percentage of Sellers selling their homes to leave the country, has increased drastically over the past two years, where emigration-driven sales accounted during the first quarter this year, 14,2% of all sales – a big jump from the 10% recorded in the last quarter last year and a double figure looking at stats over the past two years! South Africa has lost around 3 000 wealthy South Africans with a net worth exceeding R15m rand over the last decade where most emigrated to the UK, Australia and the USA.
  • The average time that properties stayed on the market before being sold during the first quarter of this year, was almost 4 months (15 weeks and 3 days) versus the 17 weeks and 6 days recorded in the last quarter of 2018.
  • 95, 3% of Sellers had to drop their selling price during the first quarter 2019, versus the 94, 3% of the last quarter 2018, with an average price drop of around -9, 4%.
  • The top reasons for selling is downscaling because of life stage and accounts for 23% of all sales, whilst 15, 9% had to downscale due to financial pressure to meet their commitments.
  • The popularity of sectional title units are on the increase and 58% more sectional title units have been built over the past estimated 12 months in SA.

Overall it is expected that the SA Property Market should more or less keep the present status quo for the foreseeable future and it is expected that the market will only start picking up again once the dust has settled after our general elections after the 8th of May. Single figure property price increases around 4% – 6% is still the general prediction at this stage for the year ahead. Overall it is expected that our property market will remain to be a Buyer’s market for a prolonged time and vulnerable with subdued demand and longer sales cycles, reflecting the trend of the past 12 months and longer.

We desperately need economic and political certainty, growth and clear future indicators for the way ahead. Hopefully a newly elected and well merited new leadership will just do that – leading by example, taking our vulnerable rainbow nation from ground zero to a better future with sustainable job creation. The longer term outlook for our fragile property market will pretty much be based on the political and indicators after the elections, the strength of our labor market, affordability, and hopefully more positive buyer’s sentiment after the elections.

The bottom line is that it is widely acknowledged and important for long term wealth creation to somehow or the other, get a foothold on the property ladders, especially since it is a Buyer’s market presenting excellent investment opportunities to make astute investment choices. Especially looking at rentable sectional title units and for sure at the right locations in the Old East of Pretoria with a guaranteed and extensive diplomatic and student pool of tenants.

Heiberg Estates is proud to announce the launch of a very upmarket, trendy and secure lifestyle Sectional Title Development, “Pecan Place”, located walking distance to Brooklyn Mall and close to the University of Pretoria – perfect for yourself as a treat or for retirement, as well as ideal as a buy-to-let investment. Please join us for the official launch on 16 May and be our guests for a great event, complementary food and champagne and experience what the latest trends, a luxury and secure lifestyle and top quality finishes in upmarket sectional title developments are.

Please register for the exclusive “Pecan Place” launch, art exhibition and refreshments:

https://docs.google.com/forms/d/e/1FAIpQLSdM-ZFR9apONmAy_zo70cuiUcCFN9tyP9WFJzb23V5BNZqyKQ/viewform

Or for more information on the development visit our website:

http://www.heibergestate.co.za/hb/pecan-place/

 

With very best and warm regards, hopefully we will see you at the Pecan Place launch – please remember to register, click as above!

Bambie & Heiberg Estates Team