Real Estate Investor Magazine South Africa May/June 2015 | Page 23

REI RESIDENTIAL
LOWER-SEGMENT PRICE INCREASE DRIVES
GROWTH IN HIGHER-VALUE CATEGORIES

L

ightstone has reported an actual
price growth rate of 6, 72%, with
a steady performance in the
higher-end markets throughout last
year. The value of price growth was
its highest since the 2008 subprime
mortgage crisis, with low-value price
growth leading the pack by just under 30%, followed by properties in mid-value, high
and luxury markets.
Although price growth forecasts are pegged at 7, 2% for this year for a potential high
road scenario where growth domestic product grows more than expected, a demand
for security in the face of deteriorating crime statistics, and aggravating factors such as
labour unrest, will pose the biggest threat yet to the property market, as these reduce
the purchasing power of buyers and bank risk appetite in the low- and mid-value
markets. Lightstone therefore forecasts a more realistic residential price growth of
around 5.8% for this year.
In the higher-value markets, around 60% of property transactions are bonded, with
over 85% of bonds granted being for primary loans as opposed to further advances or
switches. Average mortgage-lender loan-to-value of primary bonds range from 82% to
93%, depending on the bank, with deposits of between 7% and 18% required.
Newly registered bond values peaked in the second and third quarters of last year, at
their highest since the 2008 subprime crash with financing in excess of R9,5 billion from
Standard Bank, followed by First National Bank with just over R8 billion and ABSA with
just over R7 billion.

Tony Clarke
Managing Director
Rawson Property Group

StatsSA puts the rate of rental inflation at just 5,
05%. There are however several pockets of high
demand in Gauteng where rentals are rising faster
than this – and landlords are making better-thanaverage returns.

Veshad Pooran
Manager
Pam Golding Properties Eastern
Johannesburg

The property Gauteng market in has enjoyed ongoing
growth with prices rising by an average 4.6% over the
past five years. Property prices here have marginally
outperformed the national average, with average
annual increases of around 5.3% recorded during the
same period.
www.reimag.co.za

EXPERT Q&A
CRIMINAL SYNDICATES
OPERATING IN SECTIONAL
TITLE COMPLEXES

Sheree Peach
Rentals Manager
Renprop Residential
Q Where do these criminal
syndicates operate?

These syndicates are operating in sectional
title complexes throughout Johannesburg’s
northern suburbs, for which they
fraudulently apply for lease agreements
where they rent a number of units in
different complexes over the same time
period.
Q How do these syndicates con
estate agents and landlords?

These criminals have been very clever in
creating fraudulent documents. It takes a
close inspection to spot the discrepancies.
It is only when you begin to check the
applicant’s place of employment and
analyse documents like bank statements
and payslips that you find that the numbers
do not add up. At face value they are
assumed to be good tenants because they
are good payers with clear credit records
and pay cash upfront for the rental of the
unit.
Q How does this affect landlords?

Generally, the laws governing rental
agreements offer far more protection to
the tenants than landlords, which means
that getting rid of an undesirable tenant
such as these is exceptionally difficult, time
consuming and expensive. Landlords who
do not vet their tenants against stringent
guidelines are putting their investment at
risk.
Q What can landlords do if they
suspect their tenant is part of
these syndicates?

While these tenants generally avoid
confrontation, they do not want trouble and
prefer to fly under the radar. It is best to
report it to the police and not to confront
the tenants with accusations directly.
MAY 2015 SA Real Estate Investor

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