Real Estate Investor Magazine South Africa December / Jan 2016 | Page 23

REI RESIDENTIAL

EXPERT Q&A

INCREASE IN RESIDENTIAL PRICES DESPITE WEAK ECONOMY

R.J. Palano

O

ctober property statistics released by ooba, South Africa’s largest bond originator,
show an increase in residential property prices, despite current weak economic
growth.
ooba’s Average Purchase Price rose by 7.6% year-on-year price to R1,024,953 in
comparison to the price growth of 5.7% recorded in the third quarter of 2015. First-time
Buyers’ Purchase Price showed a milder year-on-year increase of 3.4% to R 787,789.
“The moderate acceleration in house price growth is primarily due to demand
for residential property exceeding supply, as a result of stock constraints. However,
home buyers are under increased financial duress which is evident by the 2.7% drop
in Approval Rates and the higher percentage of applications that ooba is receiving for
100% bond finance,” says Rhys Dyer, ooba CEO.
First-time Buyers continue to drive the market, with 54% of all ooba’s applications
received in October from this segment. “As this segment of home buyers generally
do not have access to deposits, increased First-time Buyer activity accounts for ooba’s
statistics showing a 2% year-on-year increased demand for 100% bonds,” adds Dyer.
Despite lower approval rates, lenders are continuing to compete for the home loans
market, evidenced by the 18 basis point year on year improvement in the Average
Interest Rate recorded in October at prime plus 0.28% compared to prime plus 0.46%
a year ago.

Q

Are there any downsides to a Self-Directed IRA?
Yes. Inactivity. There is no reason to have a SelfDirected IRA if you don’t use it. The ability to get
involved in a high yielding, creative transaction is
what a Self-Directed IRA is all about.

Q

What investments can I make with an IRA LLC?
Anything you can invest in with a regular LLC, with
the exception of collectibles and insurance contracts.

Q

Is real estate a good investment for my IRA?
Yes. Real estate offers a tangible value with excellent
returns. As investors become aware of this, many
are gradually moving some or all of their retirement
capital into the real estate market.

Q

Can I use my IRA to purchase property I already own?
No. This is considered a prohibited transaction.

Q

Is investing my IRA in real estate against the law?
IRA law does not prohibit investment in real estate.

Q

What is the most effective way to buy Real Estate
using my IRA?
There is no question the Self-Directed IRA LLC is a
good choice for investing in real estate. This option
gives you the most control over the IRA’s finances.
However, using Equity Participation Notes, Options
and the beneficial shares in a Land Trust are also
simple strategies that are easily implemented.

Q
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What happens to t H