Average house costs R924 800

[xrapidx]

Cool I bought my wife a plot on the moon...

Having some trouble getting to it at the moment though

Give it 10 years of so...

 

[vespax]

I get so depressed reading these types of threads. Seems almost impossible to get into the housing market here in Cape Town.

 

[xrapidx]

I get so depressed reading these types of threads. Seems almost impossible to get into the housing market here in Cape Town.

It is... I'm in the same boat... my new plan is to rent in Cape Town, buy a place in Johannesburg, and rent that out... at least then I'll have property.

 

[Angelface]

You are thinking the right way. It just seems that JHB is also a bit expensive. Why not buy in a smaller town? Or consider buying Unit trusts that invest in property. Yield approx 7.8% and residential property approx 7.3%, taking costs and such into consideration.

TAKEN FROM PERSONAL FINANCE

House price growth is still slowing, Absa index shows
July 4, 2007

By Roy Cokayne

Pretoria - The upsurge in house prices is slowing down even more, possibly as a result of the full implementation of the National Credit Act (NCA).

Absa's latest house price index, which was released yesterday, showed that growth in house prices in the middle segment of the market last month declined to 14.9 percent year on year from 15.4 percent in May.

However, Jacques du Toit, a senior economist at Absa Group Economic Research, said it was probably too early to make a definite conclusion that the NCA resulted in house price growth rates slowing down further.

"The possible full effect of the NCA on the growth in house prices may only become visible in a couple of months' time," said Du Toit.

"Nominal month-on-month house price growth continued its downward trend since the start of the year and reached its lowest level in more than seven and a half years in June. This caused slower year-on-year growth and a further moderation is expected in the remaining months of 2007."

He added that higher interest rates would also lead to slower growth in house prices.

Absa said the average price of a house last month was about R924 800 and house prices increased by 15.5 percent in the first six months of this year compared with the same period last year.


Excluding the impact of inflation, house prices increased by 7.9 percent in May this year, the lowest growth rate since February 2003, when it was at the same rate.

In real terms, house prices increased on average by 8.7 percent year on year in the first five months of this year.

Meanwhile, Lighthouse Risk Management yesterday reported that its house price index for February appeared to confirm that from late last year there was "something of a mini recovery" in the residential property market. This was in line with SA Reserve Bank data indicating an uptick in new mortgage advances growth through much of last year.

However, Lighthouse said that it was expected that there would be a resumption of the downward trend in house price inflation this year as further negative impacts of interest rate hikes fed into the figures while the implementation of the NCA "could also prove to be a short-term hiccup".

 

[chiskop]

Yeah, it may be cheaper to buy in a small town, but then you'd have to live there.

 

[Angelface]

No, buy to rent at first. Just to get your money going. For example. We bought a house in Klerksdorp last year for R108 000 and just had an offer for R305 000. We don't live in it. We received rent of R2 200 per month there. It depends what you want to buy. Of course there aren't any houses that cheap here anymore, but look around before you buy. Student housing is also a good idea!

 

[LandyMan]

Some more news on the property market for those interested.
Y/Y growth slows a further 0.5% to 14.9%.

From my side of the fence I hope the trend continues, property owners on the other hand would certainly want the opposite.

http://www.fin24.co.za/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2140618

The big question is "What is considered an average house". The first house I bought cost me R134 000, and they are now going for around R550 000. So I started off with a below average house, looking at the current prices.

Don't pay too much attention to the headlines, there are alot of properties available, even if they are "below average" according to the article or the price of the property

 

[noxibox]

You would have to do research to find areas where property prices are likely to climb faster than average and where you can expect to find tenants easily. It is definitely difficult to manage a property when it is in another town.

 

[Angelface]

Sure it is a bit difficult. But usually owners don't want to pay the 10% commission to a reputable agent that would really look after their property. They ask friends and relatives, not realizing that these people aren't really interested. Buying a house is a big investment. And therefor it requires some investigation just as investigating a car before you buy. There are usually more tenants that there are houses, so it will not be a problem to find tenants.

 

[Sebs]

The thing is to just get on the property ladder at the bottom - not at the "average" house - which is way beyond the first-time buyer. It always has been that way.
I got on the property ladder 30 years ago and it was just the same as today -there was no way I could afford an "average" house. So you buy something small in what may not be the larniest part of town. Maybe a 65sqm flat. Then as the property market grows, just like your salary, you can get something better in five years or so. And so maybe in 10 years you can move to the "average" house - and so on. This is how property works. Nobody starts in the middle unless they are particularly lucky. It takes time and patience.

 

[LandyMan]

The thing is to just get on the property ladder at the bottom - not at the "average" house - which is way beyond the first-time buyer. It always has been that way.
I got on the property ladder 30 years ago and it was just the same as today -there was no way I could afford an "average" house. So you buy something small in what may not be the larniest part of town. Maybe a 65sqm flat. Then as the property market grows, just like your salary, you can get something better in five years or so. And so maybe in 10 years you can move to the "average" house - and so on. This is how property works. Nobody starts in the middle unless they are particularly lucky. It takes time and patience.

Yep, pretty much what I said, and how it worked for me.

 

[JK8]

The thing is to just get on the property ladder at the bottom - not at the "average" house - which is way beyond the first-time buyer. It always has been that way.
I got on the property ladder 30 years ago and it was just the same as today -there was no way I could afford an "average" house. So you buy something small in what may not be the larniest part of town. Maybe a 65sqm flat. Then as the property market grows, just like your salary, you can get something better in five years or so. And so maybe in 10 years you can move to the "average" house - and so on. This is how property works. Nobody starts in the middle unless they are particularly lucky. It takes time and patience.

Nice one!

 

[Nanfeishen]

I think a good idea would be to buy a cheaper house in a smaller town that is experiencing a property boom. Keep it for argument's sake for a few months and then sell with profit. Buy the next one and the next, and before you know you'll have a sizable deposit to put down on your own house. Just make sure about average rentals etc. in that town so that you won't loose out.

Not a bad idea, but if you are a Capie, the chances of finding a house in any town less than 3 hours out, for under 1Mil nowadays is very rare, and it will probably be a fixer up, which will set you back a few thousands on top of the price.
There has been a huge rush on the country lifestyle market in the last 2 - 4 years, and the affordable places are snapped up by the locals more often than not for B&B's and guest houses.
The other thing to consider about country towns is their infrastructure, some are desirable destinations for a month or two in the year, and the rest nothing, plus, many of the smaller towns are falling apart in the sense of business, and the younger generation who are not farming, are all flocking to the cities for studies and better work. Therefore renting out a property on a permanent basis may not work.
Also consider that rents are a lot less in the country, so dont expect to get much rent wise.
For short term, country investment is not always the best, but if you have the capital to invest over 5 - 10 years, then consider it.

 

[Sneeky]

From Moneyweb

The R10 000-a-month property shocker

Only people with R10 000-plus in spare change need apply to bank to buy average home – NCA latest.
Jackie Cameron
03 July 2007
Under the National Credit Act (NCA), only people who can prove they have at least R10 000 in spare change each month need apply to buy a modest home in a middle-class suburb.

This emerged when the latest house price statistics were released by Absa (JSE:ASA) on Tuesday.

The average house in an average suburb cost about R925 000 in June.

Banks can no longer tell you what you must earn to be eligible for a home loan on that amount because they no longer grant credit based on a percentage of gross income, said Absa senior economist Jacques du Toit.

Instead, the bank will award an amount based on an assessment of your current debts and income. It must tally up all your bills, ranging from essentials - like food - to nice-to-haves such as children’s extramural activities. The bank will grant you a loan based on your remaining capacity to take on debt.

Looking at this average house price, and taking into account the average interest rate in June and a repayment term of 20 years, Du Toit estimates that you will need to have slack of about R10 800 a month to get approval for a 100% loan.

Absa’s House Price Index shows that price growth was at its lowest in almost eight years in June.

The bank expects growth to continue slowing into 2008.

Interest rates are expected to start dropping some time next year, which should fuel price growth.

Real year-on-year growth in house prices of 7,9% in May – the lowest since February 2003 – is still a little higher than inflation (around 7%), while nominal house price growth is around 14-15%, according to Absa.

Du Toit said it is too early to assess the possible impact the full implementation of the NCA in June could have had on house price growth last month.

This is because there is likely to be a lag effect. Interest rate increases, for example, are believed to take six to nine months to have an impact on property prices.

Nevertheless, Absa does not expect the NCA to have a devastating effect on the residential property market.

“We don’t think the market will collapse, though there may be a temporary period of adjustment,” said Du Toit.

However, the introduction of the NCA has meant a permanent change to the environment. Ultimately the demand for housing will remain, said Du Toit, noting that South Africans are still expected to aspire to property ownership.

He said volumes may drop, but prices are expected to continue rising, though at lower levels than a few years ago.

In the meantime, people who want to buy may have to put in lower offers or opt for properties in a lower price range.

Spending patterns will also have to be adjusted by many people who want to get a foot on the property ladder.

Note too that economists expect another interest rate hike soon, at which time you will have to show you have even more than the R10 800 available for extra spending if you want to buy a modest home.

http://www.moneyweb.co.za/mw/view/mw/en/page47?oid=144553&sn=Detail

Now if we can just curb the foreigners buying up land things might become a bit more affordable.

Outsiders tighten property grip

Foreigners are increasingly waltzing off with South Africa's prime real estate - this despite government threats to curb foreign property ownership.

http://www.fin24.co.za/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-1795_2141253

 

[NoADSLyet]

and Im only 23.

That explains a lot !!!!!!!!!!!!!!!

Well the bubble will have to burst sometime. Chinese will take over here on property as they and Japs do in NZ and Aus. Real dangerous threat!

 

[Natas]

The problem with the NCA is that it takes your earnings and reduces it by your expenses. The problem here is that if you are truthful about your expenses, then you will not qulify. However, teh Act faisl to recognise that when people buy somehting like a house, they will probabaly change their spedning habits. I know taht I was renting for R4000 PM or whatever and earned 15K, I would spend one way, but then if I had a bond with payment fo R8000 pm, I would change my spending habits compeltely. That is why, IMO you should within raeson "manipulate" the infomration regarding you spending habits. If you do this however, you should reasise that you will not be able to depend on teh NCA if you get into trouble. The credit receiver providing incorrect information on their income and expenditure form is a complete defence for teh credit provider.

 

[JK8]

That explains a lot !!!!!!!!!!!!!!!

Well the bubble will have to burst sometime. Chinese will take over here on property as they and Japs do in NZ and Aus. Real dangerous threat!

Ye yawn............

The Malaysians are already grabbing most of the land in Jozi and building estates and townhouses everywhere!

 

[pookfuzz]

The moneyweb article is misleading. I went today and spoke with a Nedbank consultant about a home loan.

Having spare R10000 spare cash will not get your a loan for R925 000. Having R28000 spare will. It seems the banks have simply combined their old way and the new way. Now they do the new thing and figure out your disposable income, then they use the old way and apply a 30% limit ( but on the disposable income instead of your gross salary ) to figure out the max repayment amount. Fun.

The calcs are very bogus too, for example, rent counts as an expense even though you would not be paying rent after purchasing a property.

I suspect the consultant was a moron.

Anyway if anyone can recommend a home loan place that actually works as moneyweb suggests I would be keen to know.

 

[vespax]

That sounds like a lot of fuzzy math going on in Nedbank. How can they expect to sell loans doing things like that?

 

[pookfuzz]

That sounds like a lot of fuzzy math going on in Nedbank. How can they expect to sell loans doing things like that?

No idea - which is why I think the consultant was a moron.

Same consultant also refused to do pre-approval thing, apparently they not allowed to any more because people use that to shop around for a better loan. So basically I won’t know if I will get a loan until I actually try purchase a place. The best I could get was an estimate of what would maybe be approved. I don’t like maybe. Oddly the website still offers pre-approval so I think I will just try that instead - hopefully their math skills are better.