South Africa’s most comprehensive online source of property data, the South African Property Transfer Guide (SAPTG), now publishes a convenient, up-to-date summary of the main economic indicators that relate to the property market.
Freely available to the public via its website
www.saptg.co.za, the
SAPTG Property Market Indicators page means that interested parties no longer have to spend hours trawling countless websites to find the important information they need.
Dieter Deppisch, Head of Property Research at SAPTG explains, “The data we have brought together will help browsers quickly understand what is going on in the market. One of the big benefits for estate agents is sharing the information with prospective clients. Not only does having this information and sharing it boost their credibility, it enables them to advise clients on the right strategies. For example, they can discuss the trends affecting different housing segments and use facts — such as 81 percent of houses are currently selling at below their asking prices.”
Deppisch is quick to point out that the Property Market Indicators page is not just for agents, though. “It’s for anybody interested in the SA property sector,” he confirms. “The page summarises data from a wide variety of sources, including the South African Reserve Bank (SARB), Statistics South Africa, the major banks, mortgage originators and other property consultants and research houses, and tracks whether the various indices have changed and, if so, by how much. All of which makes it an indispensable snapshot for developers, investors, valuers, journalists and even private buyers and sellers.”
Visitors to the SAPTG website can access the Property Market Indicators page via the ‘Market Indicators’ link in the top menu on the homepage
http://home.saptg.co.za/market-indicators/ . “You don’t have to subscribe or login to access the data,” verifies Deppisch, “and there’s a useful jargon-busting document available as well, via the ‘
need some help?’ link on the page.”
"The Knight Frank Global House Price Index will be included shortly, for instance, which will give us an idea of how the local market compares internationally,” says Deppisch.
SA - The Good News
The inexact science of foresight provides an appropriate backdrop to our look ahead for South Africa’s real estate sector in 2011.
With 20/20 hindsight, we can confidently report that the past two years alarming decline in the number of sales, bonds and estate agents was largely influenced by both local cycles as well as the country following the rest of the world into a recession. In June 2008 prime sat at 15,5% but some energetic cutting on the part of the Reserve Bank reduced that to just 9%, the lowest rate since February, 1974. The longed for mini-recovery in 2010 subsequently lost some steam in Q3 and Q4 with year-on-year growth figures slowing.
‘Where to from here’ can be answered with another science, namely insight; less accurate than hindsight but much better than foresight!
THE ECONOMY
The favourable interest rate environment still has to work its way through the primary and secondary economies. Generally, ripple-effects of rate cuts (and hikes) can take up to 18 months to dissipate. Unfortunately the low rates are not the panacea everyone had hoped for. The overall economic climate suffused as it is by debt-deleveraging, high unemployment, tight lending criteria, low business confidence and high residential stock levels presents challenges that cannot all be repaired in 2011.
The magic toolbox is wanting. Just when you have found a loose nut, you discover that you don’t have the right size spanner. Fears of a potential sovereign debt crisis in Europe continue to plague economists. There is little the Reserve Bank can do to stem the capital inflows which have propelled the rand to unwelcome levels. The Bank has repeatedly said it will not target a specific exchange rate for the rand, but said recently the currency is overvalued. A strong Rand means that foreign investors find South African real-estate less appealing and may look elsewhere for bargains.
Inflation is expected to remain at an average of 4,3% in 2011, moving marginally upwards to 4,8% during 2012. Food and petrol prices have been identified as potential longer term risks. We do not expect any fireworks in the domestic growth outlook. GDP growth sat below 3% for most of 2010 and is expected to average 3,3% and 3,6% in 2011 and 2012 respectively. Household consumption expenditure is similarly expected to remain constrained, with high unemployment and significant household debt levels blamed as culprits.
Residential repossessions will likely decrease in 2011 as financial institutions use more innovative mechanisms to assist defaulting clients. SAPTG has repeatedly said that this year will be consolidatory in terms of house price growth with the middle residential sector set to remain particularly muted throughout the year. At the lower end of the spectrum we believe that house price growth will get stronger due to down-sizing and new entrants qualifying for mortgages through government-sponsored or driven programs. Prices in the luxury upper end including leisure properties at the coast and golf estates are expected to remain weak throughout the year with some distressed units selling below replacement value.
However, resilient long-time property professionals and investors know that property cycles don’t stay in the doldrums forever and work done in 2011 will form the foundation for improved sales next year.
LEGAL
The much anticipated Consumer Protection Act (CPA), designed to look after consumer interests will be tested in courts and its impact on developers, sales agents and sellers will become more apparent in coming months. Also the Protection of Personal Information Act (POPI) will make landfall and affect the way in which many estate agencies, bond originators and law firms interact with potential and existing clients. POPI was conceived to give effect to the right to privacy by ensuring that an individual’s personal information is safeguarded when processed. It balances the right to privacy against other rights, such as the right to information as well as important international interests.
EDUCATION
The end of 2011 marks the deadline for all estate agents and principals to have submitted their portfolio of evidence (POE) or have met the requirements of the National Qualifications Framework (NQF) 4 and 5 respectively, if they want to continue to trade and earn commission in 2012. While many procrastinate, others are already reaping the fruits of a qualification that will stand them in good stead for the year ahead.
In summary, with the benefit of hindsight and the addition of insight, foresight would indicate an interesting, if not a particularly earth-shattering year for real-estate in 2011.
But then again, nothing stays the same, so hold onto your hats.
Dieter Deppisch
Head: Property Data Research
Knowledge Factory
Following the recent acquisition of Knowledge Factory by Kagiso Media and Mint Technologies, Knowledge Factory will be moving to their new office as of Monday, 24 January 2011.
The new address is:
H Santos Building
30 Arena Close
Bruma
2008
The newly created company, named Kagiso EProps will continue to operate using the Knowledge Factory, South African Property Transfer Guide (SAPTG) and PropertyDotGo brands for the foreseeable future.
The good news is that their telephone number has not changed, you can still call on +27 11 445 8100.
After 11 years with the company, Geraldine Mitchley, managing director of Knowledge Factory has resigned to follow new opportunities in a diverse industry.
“Kagiso Media and Mint Management Technologies acquired Knowledge Factory at the end of 2010 and this gave me the perfect opportunity to secure KF’s future while making the personal career changes I had been aiming for.” said Mitchley.
The newly created company, named Kagiso EProps will continue to operate using the Knowledge Factory, South African Property Transfer Guide (SAPTG) and PropertyDotGo brands for the foreseeable future, and besides moving premises it is business as usual.
“There has been little disruption to day-to-day operations", says Dave Woolnough, CEO of Mint Management Technologies.
Dave assumes Mitchley’s leadership role but quickly adds that the Knowledge Factory staff are the ones who have been and continue to run the business as it should. The teams remain committed to customers and business partners.
“Geraldine has made an outstanding contribution to Knowledge Factory over the last decade and together with Primedia and her fellow directors and management team, developed Knowledge Factory into a leader in their market. Now as part of our stable we will offer our customers an unparalleled set of strategic management, media, data provision, analysis solutions and skills under one roof,” says Woolnough.
“My time with Knowledge Factory has been beyond my expectations and I will sorely miss the camaraderie of the team, the elation of creating product and strategies and then the involvement of all in their execution. I am looking forward to 2011 and beyond, building on my career in today’s rapidly evolving knowledge economy, this is what excites me,” says Mitchley.
“Kagiso Media management would like to thank Geraldine for her invaluable contribution to both Knowledge Factory and the acquisition process and wish her everything of the best with her new endeavours,” concludes Woolnough.
19 January 2011
Suzanne Necker was an insightful woman. The 18th century wife of the French finance minister wrote: “Fortune does not change men, it unmasks them.” Much the same can be said about the property market. Fortune (or the lack thereof) does not change real-estate, but it does peel of its mask. This has been clearly apparent in the past 5 years in South Africa. No-one questions the fact that real-estate is a medium to long-term wealth building tool. But the fortunes of the past few years has unmasked the fragility of this asset class and given us insights into the economy as a whole.
In the ebb and flow of today's residential property market– exchange rates, interest rates, inflation rates and business confidence levels, nothing is static. In fact these very factors unmask the market value of properties. During the boom market from 2000 until Q2 of 2007, determining the value of your property was fairly simple. Rental rates and selling prices had been rising steadily, vacancies were low and construction was booming. Sellers were smiling. Buyers had easy access to finance. But consumers do not adapt to change quickly. This is evident in the unrealistic, even stratospheric prices some sellers are asking for their properties. In 2005 just 43, 5% of properties sold for less than the asking price. Today that figure has climbed to 81% -a sad indictment of sellers’ expectations and estate-agent complicity. As a result properties are taking much longer to sell. In 2005 it took, on average, only 7 weeks to sell a house. In 2010 it has more than doubled, to 15 weeks and 4 days.
The change in credit-extension, a culmination of the introduction of the NCA in 2007 and a fear-inducing recession in 2008/9 has seen the percentage of buy-to-let investors drop from 20% in 2005 to just 7% in 2010. First-time buyers have been particularly hard it and the change has certainly not been “as good as a holiday”. Only 15% of transactions in the 3rd quarter of 2010 were by 1st-timers while in 2005 that number stood at 28, 3%. Their average age has moved from 31 to 38 years old, an indication of a shift to the next life-stage, an older, more financially secure buyer.
In the commercial property market, vacancies remain high. Recent data from the industrial property market suggests that manufacturing struggled more during the recession than did other economic sectors. Some landlords are looking to improve liquidity or ease cash flow by down-sizing, selling some assets or sub-letting. As a result many commercial property values have seen declines reflective of the pain experienced in the residential sector.
Change is a certainty. Property professionals, developers, investors, buyers and sellers have no option but to stay up-to-date with fluctuating property prices. As a pre-cursor for informed decisions, Auto Valuation Models (AVM) using sophisticated statistical analysis have become a powerful and necessary tool. These predictive market values are easily accessible, available online or via a mobile phone. Knowledge Factory, a leading geo-business insights company, has released the next step forward, a peep into the future with FutureVal. This looks at a property’s performance and predicts its value 12 months from now.
With the mask off, decision makers are enabled to assess risk carefully before plunging into the changeable but rewarding world of real-estate. For more information please visit www.evaluatenow.co.za.
Dieter Deppisch
Property Data Research, Knowledge Factory
3 December 2010
In a move to extend their reach into marketing and property data insights Kagiso Media and Mint Management Technologies acquired Knowledge Factory, a property and marketing insights company, from Primedia for an undisclosed amount.
Kagiso Media which bought a 65% share said that Knowledge Factory, South African Property Transfer Guide (SAPTG) and PropertyDotGo brands will be maintained and housed under a new company called Kagiso EProps. The remaining 35% of the shares will be owned by Mint.
Knowledge Factory provides detailed intelligence about the South African population, markets and property to its clients, who use the information to make business decisions. The SAPTG and PropertyDotGo brands provide intelligence to realtors and financial services institutions respectively.
“Kagiso Media is eager to extend its reach into new markets that complement our existing media and advertising businesses. Knowledge Factory is a healthy and fast-growing business operating in an expanding market,” says Mervyn van Zyl, Kagiso Media’s Financial Director, about the transaction which brings together three leading organisations in their respective fields. “In addition to providing us with new avenues for expansion, we will also be able to leverage Knowledge Factory’s solutions and experience in our media planning and advertising businesses,” said van Zyl.
David Woolnough, C.E.O. of Mint Management Technologies, is confident that the company now has the capability to take the solution services offering to the next level says, “we are excited about our enhanced and comprehensive solution offering that brings together Mint’s strategic management, information access and integration skills with Kagiso Media’s advertising products, combined with the world-class data provision and analysis solutions provided by Knowledge Factory.” He will lead Kagiso EProps and retains his current position at Mint.
“Knowledge Factory has been seeking new shareholders to help it accelerate its strategy following several years of robust growth,” says Geraldine Mitchley, CEO of Knowledge Factory, “in particular, we wanted a strong technology partner that could help implement advanced web and mobile technologies as well as provide new value-added services to our clients. We have achieved all our goals through the transaction with Kagiso Media and Mint Management Technologies.”
Kagiso EProps will move into the Mint offices in early 2011. “Our customers can look forward to this partnership producing a range of new solutions that will help them achieve even more with the information that we provide.” The new ownership structure will not cause disruption to ”our operations as we transition,” Mitchley concludes.
Recent data just released by ABSA, FNB and Statistics SA indicate continuing difficulty in the construction sector. This has a very real effect on real-estate supply and demand cycles as well as risk associated with credit extension..png)
According to Statistics SA, there was an overall decline of 11, 2% of plans passed year-on-year (y/y) and an even more significant 33,5% y/y contraction in buildings completed. Notwithstanding the fact that the recession may be over in terms of GDP numbers, the lagging effects and impact on demand for new houses will take some time to play out.
The decline is not represented equally across all provinces. Some areas have experienced more pain than others. For example, Kwazulu Natal has experienced a 24, 4% decline in plans passed and a depressing 49, 9% decrease in the number of new houses, flats and townhouses completed y/y. However, relative to national data, KZN only accounts for a small slice, about 8%, of the pie. The two largest players, Gauteng and the Western Cape (accounting for 62% of buildings completed) have also fared dismally. The past year has seen these two provinces have a cumulative y/y decline of 35, 7% in the number of buildings completed.
Drilling below the statistics provides some insights into the economics of this sector.
Full-title small homes (≤80m²- down by 31.4% y/y) and full-title larger homes (≥80m²- down by 23.7% y/y) showed less contraction than sectional title flats / townhouses (down 43.5%). Overall demand for sectional title properties has lagged the mini-recovery in other sectors of the real-estate economy. Sectional title has traditionally seen young families discover the joys of home ownership. During the economic downturn, though, the average age of first-time buyers has increased from 31 years old to 37 years old as lenders raised the stakes for creditworthy mortgagees. As a result sellers have had to rely on older, more qualified buyers who may be downscaling due to lifestyle or financial reasons. Then too, some developers just got it wrong; creating spectacularly finished high-price units for which buyers are few and far between.
Thankfully most property developers are approaching each project with more science and less thumb-suck. Rather than simply relying on anecdotal evidence of WHWN (what’s hot, what’s not), they increasingly turning to price-band statistics, demographics and historical supply and demand cycles to forecast viability in a particular area.
With continued reticence on the part of credit-extenders, developers have to be smart about choosing projects that are correctly aligned with the subject suburb. In addition to proximity to logical amenities such as schools, hospitals, shopping centres, parks, gyms, and libraries, planners also consider traffic flow, transport hubs (taxis, bus, BRT, GauTrain), or even sports facilities depending on the type of development under consideration. The needs of the target market and its specific demographics must be taken into account, their income level and their risk profile. Developers generally only receive funding after furnishing proof that 60% or more of the plot-and-plans have been sold.
“Time is money”, and nowhere is this more true than in the preliminary phases of a development. Massive input costs for infra-structure, water, power, sewage, roads, lighting etc. have to be in place before the first house can be built. The quicker the units can be sold off-plan the faster developers and their investors can see a return on their investment.
The South African Property Transfer Guide (SAPTG) supplies developers and contractors with specific reports to assist them in determining appropriate price-bands, demographic reports and other specialist property reports to ease the pain and ensure that decisions are informed and positively impact the bottom line.
The most recent rate cut will make new developments more affordable for those who are in the enviable position of being able to purchase a new home. The collective effect of the past two rate cuts will no doubt also provide a modest confidence boost for contractors, architects, developers and others dependant on this industry. While we expect growth in this sector to remain pedestrian during the next 12 months, the worst it appears is over.
For more information on developers reports, please contact us.
Dieter Deppisch, 22 November 2010
SA's property market shows a relatively positive rating against many other countries, according to the Knight Frank global house price index, but the crisis has forced a number of local homeowners into distressed selling.
For example, the index reports that property prospects in Dubai are still looking grim, as lending woes continue to plague the United Arab Emirates' region. Once renowned for spectacular building projects, the index reports a negative growth of minus 8.2% Dubai's average house prices.
In the report released by Knight Frank UK, Dubai is placed 38th in the world, ahead of Estonia, a country in the former Eastern Bloc that has recorded a negative growth of minus 40.3%.
Meanwhile, SA has moved up from 11th to 6th place with growth of 11.8%.
China tops the list with a year-on-year growth rate of 68.0%, well ahead of Australia in 4th place, with growth of 20.0% during the first quarter of this year.
The UK, in 11th place, has an 8.8% increase, and the US, ranked 22nd, shows a 2.3% rise.
Dieter Deppisch, who heads the property data research arm of Knowledge Factory, says that the SA rating, indicates some benefits from the implementation the National Credit Act (NCA).
“The introduction of the legislation in mid-2007 offered some protection from the extreme toxic debt experienced in the UK and USA during the sub-prime crisis.”
Despite the safeguards put in place by government, the global financial crisis has impacted heavily on some SA households. Regarding so-called distressed sales, Deppisch says there is no system of determining the exact reason for transactions registered at the Deed’s Office.
A distressed sale refers to a seller who is coerced to sell his property through the fastest possible means to keep creditors from the door.
“One of SA’s biggest auction houses sold 5000 properties last year. Most of these were distressed sales. The same company now reports that only 30% of their current sales are distressed and that the majority of the sales are commercial properties.”
Considering what the country has gone through, some positive signs are beginning to emerge.
In the residential category of R300,000 to R5m, full-title sales to the value of R75bn were recorded five years ago. This rose to a peak of R111bn three years ago, before plummeting to just R52bn in the year ending July last year.
However, SAPTG’s latest data shows that full-title properties sold to the value of R69.3bn during the past 12 months, a 29,9% year-on-year increase.
"Full-title sales remain the backbone of South Africas real-estate sales. These are the traditional South African suburban homes bought as a primary dwelling and represent the most stable part of property transactions. Slightly older family-oriented buyers make up most of the purchasers of residential stock."
On the other hand, sectional title sales have not shown the same resilience. Deppisch says sectional title properties are popular with first-time buyers because of lower acquisition costs, and are also favoured by buy-to-let investors.
"The tighter lending criteria in recent times, as well as the lacklustre performance of the rental market, continues to hamper sectional title sales. In addition, during the real estate boom from 2004 to2007 developers created a surfeit of sectional title stock, some of which is only now being mopped up slowly."
The number of cash buyers has shown a slight decline. During 2008/2009, 32% of full-title buyers paid cash. This figure has dropped to 28% in 2009/2010. However, with sectional title properties the rate remains constant at 30%.
SAPTG also reports that there has been a race-bias shift among buyers in the past five years, from 40% non-white buyers to 56%.
"This shift, showing a more representative buyer profile for SA, is encouraging as an emerging non-white middle class starts to enjoy the real-estate privileges that, were almost the exclusive domain of white buyers. We believe this trend will continue."
Macro-economic factors, including Eskom’s woes, rand strength/dollar weakness, commodity prices, tight lending criteria and fragility in the Eurozone continue to impede a significant recovery of the property market in SA, he says.
"All things remaining the same, which they seldom do, we forecast average house price growth to remain below 7% for this year, and to decline, possibly dipping into negative territory during next year, as the gremlins affecting our delicate economy, work their way through.
"Additional rate cuts are very possible, but may add less stimulus than the property industry hopes for. We only expect the real estate economy to begin to come into its own during the 2012/2013 cycle,” says Deppisch.
Lea Jacobs
Business Day, 19 November 2010
New software tool makes it easy for agents to canvass their areas and identify owners who are most likely to sell.
Canvass Manager, collaboration between online property software giants, CyberAgent and the South African Property Transfer Guide (SAPTG), brings an end to the frustrating task of canvassing farming areas. Available via the CyberAgent website, Canvass Manager helps property professionals compile and filter their canvassing lists quickly and intelligently.
Drawing on SAPTG data, Canvass Manager enables property professionals to quickly and conveniently create a list of every owner in their area. “Instead of having to traipse from door to door, they can now instantly see who owns each property, their age, what they paid for it, how long they’ve owned it, where the property is financed, and much more,” explains Dieter Deppisch, Head of Property Research at SAPTG.
By filtering this information, property professionals can target the owners who offer the most potential. “For example, Canvass Manager allows agents to only select owners who bought more than four years ago or who are nearing retirement age,” illustrates Deppisch, “making it easy for them to concentrate on the most likely sellers.”
Another advantage of Canvass Manager is that the data is constantly being updated by the SAPTG. “Agents can not only track and analyse the trends affecting their areas, they can also see all new sales activity,” notes Deppisch, “and so keep abreast of what deals are closing.”
Canvass Manager also enables property professionals to market much more personally and intelligently. “One simple way would be to work out owners’ ages and birthdays from their ID numbers and then use this information to drive age-specific and personalised campaigns,” explains Deppisch.
To find out more about Canvass Manager and its features, contact your local CyberAgent consultant on (011) 955-9100 or email info@cyberagent.co.za.
When real-estate software giants, CYBERAGENT, and South Africa’s most comprehensive property data resource, SAPTG, join forces, it's a match made in heaven. This collaboration sees the end of frustration for thousands of property professionals around the country as a ground-breaking new offering combines the latest software with a reliable and enriched data platform.
Every estate agent, every bond originator, every home-improvement company or supplier needs to intelligently canvass their area of operation. Who owns a property, what did they pay for it, their length of tenure, their age, where is the property financed, for how much, and so on. Knowing how to contact these potential clients is yet another challenge. The answers to these questions pave the way for a shrewd assessment of an area, filtering out unlikely clients and zero-ing in on the ones with the highest likelihood of potential business.
Until now these business insights have always been difficult to come by in one, user-friendly system. In addition, once the above is known, keeping track of marketing initiatives, correspondence and interaction with hundreds of existing or potential clients cannot be left to the fallible memory.
At last there is a viable solution, combining a reliable data source with expert marketing management software. A smart partnership between SAPTG and CYBERAGENT has seen the release of a sophisticated solution named Canvass Manager.
How does it work? Thousands of agencies use CYBERAGENT software daily to list and publish properties, manage their sales etc. Now their potential business can be cleverly analyzed too. The software pulls in SAPTG data at suburb, street and erf level, supplying all relevant details for the canvassing sheet. Within SAPTG, user-defined filters can determine for example, all current owners in a specific street who purchased their homes more than 4 years ago. This saves time, as calling on an owner with short tenure is unlikely to produce meaningful results - they are at the beginning of their ownership, making the house a home, paying off a high percentage of bond interest monthly and are settling into the neighborhood. The chance they may want or be able to move again, after a year or two, is highly unlikely.
Contact details, such as telephone numbers and cellphone numbers are seamlessly purchased through the program to populate owner details. These are user-defined targeted purchases - only for records with the highest potential for future business. Cost of data purchase is kept low with a small monthly fee and per transaction payment.
This data is fed directly into Canvass Manager, and presents the property professional with a dashboard of data together with all information on client interactions. The Canvass Manager allows for text messages, e-mails and phone calls to be date recorded. Notes regarding the client, their needs, age and life-stage can all be captured and kept.
When transfer data changes, such as when a property is sold, Canvass Manager is automatically updated with SAPTG data to reflect the most recent accurate owner/s and transfer details.
Further property details such as number of bedrooms, garages etc can simply be added, and kept for easy listing.
In addition, visitors to SAPTG’s website will have seen the new SAPTG Property tab. Here property listing data from CYBERAGENT is enriched with Suburb Trends data from SAPTG, helping potential buyers to assess average selling prices as well as the number of sales in their suburb of interest. Potential sellers are helped to adjust their expectations to realistic market-related prices. Through a link to EVALUATE, SA’s unique property valuation system, users can obtain a predicted market price of any property they are interested in, including their own.
There is no doubt that the new SAPTG/CYBERAGENT collaboration will improve property professional’s efficiency and provide useful information to buyers and sellers to make informed decisions relating to their property transactions.