Newsletter - June 2007
How time flies... It seems like a few short weeks ago that we sent out first
newsletter of the year, and yet we're almost half way through 2007
already!
So what's new? We have a great selection of articles below,
which we hope will keep you up to speed with the South African property market:
how the market is changing, new regulations that affect property
owners and potential property owners, a few growth hotspots, and as
always, a few articles summarizing the key economic factors at
play.
But first, a quick reminder about our SA Property Investment Day!
SA
Property Investment Day
IPS and Balwin Properties are proud to invite
you to a South African Property Investment Day, to be held in London this
Sunday, the 17th of June.
You are invited to join us in
Putney and learn more about the South African property market, meet the
IPS & Balwin teams, ask us any questions you have about getting into
property and where the property market is headed, and perhaps most importantly,
to get first access to Phase 5 of The Kanyin, Balwin's latest Sunninghill
development, which will be available for sale from Sunday!
So join us for a complimentary gourmet braai
and a glass of South African red wine, on the banks of the Thames
River.
To book a place and for more information, click here.
AIPP
Membership
 We're also pleased to announce that IPS was recently
accepted as a member of the Association of International Property Professionals.
IPS is the first company that focuses solely on South African property to be
accepted into the AIPP.
The AIPP is a highly respected organisation which
has been set up to guide and to regulate the international property industry. It
aims to give the buyer of international property confidence in choosing where to
spend their money.
IPS has a firm commitment to professionalism,
integrity and accountability - our memership with the AIPP is another step in
the process of ensuring we deliver on our commitment. Click here for more information about our AIPP
membership.
SA
Property Market News
Three big news stories in recent weeks have been
the introduction of the new National Credit Act, which came into effect on the 1st of
June, the hiking of rates by 0.5% at the most recent Monetary Policy
Committee meeting, and the introduction of the 2004 Municipal Rates Bill.
 In summary, the National Credit Act is a new measure to
protect consumers from reckless lending of credit, and has been welcomed into
the market by many commentators, although some investors might now find it
difficult to get a mortgage for an additional property investment, should the
banks regard it as overextending themselves.
The MPC has raised interest
rates by 0.5% after inflation pushed past government's 6% upper limit target, on
the back of rising food and oil prices.
From the 1st of July, the 2004
Municipal Rates Bill will start to come into being. The Bill will affect owners
of sectional title properties particularly, as the rates portion of your monthly
levy will now be billed directly to the owner, rather than indirectly through
the scheme's managing agent. Click here for more details on the effects this Bill will
have.
Economic
News
First National Bank's Dr. Cees Bruggemans summarizes our current economic position: 5% GDP growth over the past 3
years, inflation within the 3-6% target band and the tightening of interest
rates. He also gives an overview of the economic outlook, which he believes "remains highly
encouraging".
Looking at the two major economic powerhouses, China and
the USA, Dr. Bruggemans believes there is good reason for confidence in the revival of the US economy, while the current situation in China should mean South Africa can expect
to see a steady flow of foreign capital for years to come.
SA
Property Articles
 A shortage of skills and resources is pushing up the costs of construction, which is driving up property prices
through the replacement cost of a house, and this is likely to continue in the
run-up to the 2010 World Cup, according to Jacques du Toit, Senior Economis at
ABSA. ABSA's House Price Index recently reported the average house
price to be R911,800 and expects this to break the R1 million mark in the
not-too-distant future, leaving many potential buyers stranded on the property market
sidelines.
The higher purchase prices will create a buy-to-let revival, says Joan Muller, and as new developers
enter the market, buyers need to become more aware of the potential risks when
buying from a small developer.
The number of "Black
Diamond" families living in the metropolitan suburbs has more than doubled in the last 15 months, although most of them
retain strong connections with the townships after moving out. And with the
average city commute now up to 72 minutes, thanks to the additional 13,000 new
cars on the roads each month, we're starting to see more and more of a traffic effect on property prices.
A
Few Hot Areas
Durban continues to offer good value for money for property investors, and Dr Michael
Sutcliffe, the City Manager is confident the city is on course to achieve it's
ambitious plans ahead of the 2010 World Cup. A fast-growing tourism industry, a
booming growth in the number of new small businesses as well as the local
construction industry, and the sharp rise in beach-front property prices are
making it a popular investment destination.
Elsewhere, Joan Muller looks
at how the Gautrain is likely to push up prices in Sandton, and we explain why we believe there
is so much potential in Sunninghill.
Lastly, in the Cape property
market, Brooklyn and Woodstock are identified as two suburbs with
strong growth potential, which gives us enormous satisfaction after bringing
Crimson Square and Palm Springs to the UK market!
Happy investing!
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