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Tentative recovery likely, Bank warns

The leading indicator of business activity in SA dipped slightly in August after a strong rise in July, adding to evidence that the recovery is tentative and may slow down over the rest of the year.

The leading indicator, which points to trends six to 12 months ahead, declined 0,1% in August, after a robust 1,3% rise during the month before, figures from the Reserve Bank showed.

The Bank’s economist, Iaan Venter, said that while it was dangerous to look at one month in isolation, the monthly dip was part of a sideways trend, suggesting that growth remained subdued.

“I still believe it’s indicating a moderate growth trend,” he said.

Other figures yesterday showed that company failures rose 2,1% last month compared with September last year, after a fall of 8% in August.

“Business is still struggling,” Investec economist Kgotso Radira said. The data from Statistics SA did not bode well for household finances and consumption going into the festive season, he said.

Consumer spending is the economy’s main growth engine, accounting for 60% of demand.

“This is a further indication that more jobs were lost in the third quarter of this year,” Mr Radira said in a research note.

“Employment growth is only expected to start emerging in the latter part of 2011 when growth starts gathering momentum.”

SA’s economy shed more than 1-million jobs since the start of last year, making it one of the hardest- hit emerging markets during last year’s recession, in terms of jobs.

Last week, Finance Minister Pravin Gordhan said the economy would expand faster this year than the 2,3% predicted in the national budget last February.

Updates to official forecasts are due in the Treasury’s medium- term budget policy statement tomorrow, with market consensus betting the economy will grow about 3% this year. The Treasury’s estimate will probably be lower, reflecting its traditional caution.

The “basically unchanged” leading indicator pointed towards “stability and recovery” in the economy, said Brait ’s Colen Garrow.

But no one should be “wildly optimistic” that growth would be more than 3% this year.

Mr. Garrow sees the economy expanding just 2,3% next year — well below market consensus.

The Reserve Bank’s data showed that six of the leading indicator’s 11 components were negative during August.

This included the average number of hours worked by factory employees, probably due to strikes in the vehicle industry.

Building plans approved also had a negative effect.

The value of plans passed by municipalities between January and August this year fell 7, 8%, or by R3, 3bn, compared with the corresponding period last year, official data showed last week.

The weak performance of the leading indicator was in step with SA’s main trade partners, according to the Bank’s data yesterday.

Compared with the same month last year, the index rose 18,8%, but this reflects the “base effects” of last year’s recession.

It was also lower than the 20, 4% increase seen in July.

This suggested that although growth in the economy would slow in the months ahead, it might not be as severe as expected given strength in the rand, Stanlib economist Kevin Lings said.

The rand scaled a 33-month peak at R6, 76 to the dollar earlier this month, but has since relinquished some of its gains, trading at R6, 90/ yesterday.

“There is a reasonably good relationship between the leading indicator and overall economic activity,” Mr. Lings said.

“This suggests that the South African economy should show solid growth in 2010, with some loss of momentum into the second half of this year … but not a very significant slowdown,” he said.

Last month’s rise in liquidations was driven by failures in finance, insurance, real estate and the business services industry. Most were voluntary.

Other data from Statistics SA yesterday showed that the number of individuals and partnerships that were declared insolvent dived 47,2% in August compared to the same month last year.

That was the ninth successive year-on-year decline.

This was “further evidence that the number of individuals and partnerships that cannot pay their debt is declining relative to last year”, Mr. Radira said.

Household finances would take some time to improve due to high debt levels — which are still hovering at 87% of disposable income — and the rising cost of living, which was outstripping growth in income, he said.

“The deleveraging process will take some time … the rapidity will largely depend on the pace of employment growth.”

The indicator has a good correlation with the Organisation for Economic Cooperation and Development (OECD) leading indicator, which tracks the global economic cycle, with a short lag.

The OECD leading indicator has moderated downwards slightly on an annual basis over the last few months, suggesting that SA’s leading indicator would also move lower in the months ahead, Mr. Lings said.

Written by Alistair Anderson
This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 677 1162

October 28, 2010 Posted by | Economy & Markets | Leave a comment

Things just got a whole lot Better

We are heading into the end straight of 2010, a year that has held hope for a recovery from the doldrums of 2008 and 2009. While the outlook does not look terribly rosy for consumers as far as their debt-to-income ratios are concerned, the hope for improved market conditions has been vindicated to a degree, particularly for the property industry, with estate agents around the country reporting an increase in sales volumes.

However, affordability will continue to feature strongly as the National Credit Regulator’s first quarter report indicated that credit bureaus had records for 18.21 million credit-active consumers as at the end of March 2010. Of these credit-active consumers, only 54% were classified as in good standing while the number of consumers with impaired records continued to increase reaching 8.37 million. This h indicated a deterioration in the credit records of 191 000 consumers quarter-on-quarter and 915 000 year-on-year.

However, while consumer’s debt issues have not shown much of an improvement, the continual steady increase in market activity has restored faith in property as an investment and as a career option. But it is only those forward thinking, solution-oriented people who need apply – real estate is no longer merely an order-taking business, but rather one where agents need to be motivated, professional, innovative and involved in order to make their mark. There are those individuals who excel at this, who go above and beyond to elevate their communities, the industry and their careers in real estate as was evident at this year’s annual Nedbank Property Professional of the Year awards.

For the past 11 years the winners of the coveted Nedbank Property Professional title have raised the bar, and this year was no different. Congratulations to the overall winner, all 16 finalists whose incredibly high standards made the competition tougher than ever, as well as the Young Lions, Movers & Shakers and other award recipients. At the end of the day, achieving success comes down to how you create and establish your own personal brand.

If you live up to your brand promise, your brand can be a strong marketing tool that will ensure loyalty, repeat customers, and ultimately, success. This is one of the reasons that the PA Group has embarked on a rebranding campaign that is currently being rolled out. Up until this point in time, the PA Group and its subsidiary companies followed a multi-branding strategy. This means that none of the names are related and all the different companies function independently of each other in the market place.

However, as the storms of the recent recession set in, it became evident that a multi-branding strategy is more costly to support and didn’t allow for the optimisation of synergies that exist between the different subsidiaries of the PA Group. After much deliberation it was decided to move from a multi-branding strategy to a single-branding strategy, where the subsidiaries of the PA Group will become interlinked. As South Africa’s leading mortgage originator, the Betterbond brand was the best known in the Group, so we decided to leverage off the name by adding “Better” as an adjective to both the Group and its subsidiaries. This means that the PA Group has changed to BetterGroup, Betterbond has changed to BetterBond, Paforma has changed to BetterBridge and Aspire has changed to BetterCredit.

The Group’s new slogan, “Getting you Ahead”, is central to its value proposition of getting you ahead by streamlining the home loan application process, organising quick access to funds in terms of bridging finance and all in all providing a better service than ever before.

They say that a chain is only as strong as its weakest link – now the PA Group’s link will be as strong as the brand that it is building up. In line with our new brand identity, we have also introduced a new icon of two interlinked circles. The icon will ‘link’ all the companies in the Group together and also represents what we do in linking clients to their home by facilitating the home loan. In the same way we bridge or link clients with funds through providing bridging finance. The same holds for BetterSure and BetterCredit. No experience, prestigious award or qualification will ever make a lasting impression if you don’t proactively and consistently build and manage your personal brand and reputation with integrity. As Abraham Lincoln said, “Character is like a tree, and reputation is like a shadow. The shadow is what we think of it; the tree is the real thing.”

Written by Rudi Botha
This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 677 1162

October 19, 2010 Posted by | Economy & Markets | 2 Comments


Articles by Betterbond to be added soon!

September 27, 2010 Posted by | Economy & Markets | Leave a comment

Freehold vs Sectional

There are two types of ownership for residential property: 

Freehold / Full Title
Full title describes the transfer of full ownership rights when you own the property as well as the land it is built on. 

Freehold – Full Title: 

This is a normal free standing house with ERF number. 

Cluster House
A cluster house is a freehold property, usually in a development of similar houses. The group of houses usually has limited access through a security control. Each house is individually owned and no levy is charged to the occupants. 

Residential property used for business purposes
The property will be regarded as residential property provided that no structural changes are made which could affect its description as a domestic residential dwelling. A risk premium above the qualifying home loan rate is applicable if more than half of the house is used for business purposes. 

A smallholding is classified as such if it is situated in or within a 150 km radius of a built up area, does not exceed 20 hectares and is able to be connected to a local authority water supply or has a borehole.
There must be a dwelling on the property and the main source of income must not be from farming on the property. If the smallholding is larger than 8.56 hectares, it will be charged a risk premium above the qualifying home loan rate. 


Sectional title
This describes separate ownership of units or sections within a complex or development. When you buy into a sectional title complex you purchase a section or sections and an undivided share of the common property. These are collectively known as the unit. 

Sectional Title: 

Mini subtype house
This is a small, sub-divided portion of a large property which is suitable for cluster housing developments. 

Semi-detached house
This consists of two houses attached to one another. They may be on separate stands and bonded individually as ordinary houses. They can also be on one stand and bonded together under one bond. They can be sold as separate units in a sectional title development. 

Townhouse or flat
A townhouse or flat unit must be in an approved sectional title complex. The complex must contain residential units only. 

Duet house
This is similar to a semi-detached house, but there are two separate free-standing units on one stand. It could also be two dwelling units attached to one another on one stand. They can be sold under sectional title. When you buy into a sectional title complex you purchase a section or sections and an undivided share of the common property. These are collectively known as the unit. 

Common property
The common property is that part of the development which does not form part of any section. Structures and areas in this category include; driveways, gardens, swimming pool, club houses, corridors, lift, entrance foyer, outer wall and foundations. 

Exclusive use area
Exclusive use areas are portions of the common property which have been demarcated and may only be used by the owner of a particular section. It is an aspect of the property which you do not own, but over which you alone have use. This could include: parking bays, garden, patio, garages and storeroom. 

The Body Corporate
It is the collective name given to the owners of the units in your complex. All registered owners of units are members of the body corporate. This means you will be liable for the debt of the body corporate, so it is advisable that you scrutinize the financial statements of the body corporate before you purchase. 

These are the costs incurred in running the complex which have been paid by the body corporate. The levies include the following costs: Rates and taxes and other charges, insurance premiums, repairs and maintenance of the common property, wages and salaries of cleaners and other staff, water and electricity used on the common property.

This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 676 9256

July 19, 2010 Posted by | Freehold Properties, Sectional Title Properties, The Real Estate Market | 2 Comments

No credit danger yet, says Betterbond

The local credit scene has been under the microscope of late, and concerns are being raised about the continued appetite for credit among South Africans. But to what extent is lending returning to the market?

Rudi Botha, CEO of Betterbond, says that as SA’s largest mortgage originator, the company is not seeing any reckless lending from the banks. “When it comes to home loans, the banks are still cautious about the loan-to-value and while availability of finance may certainly be increasing, responsible lending is still the order of the day.”

For example, he says, while some 78% of home loan applications were successful in the 2005 and 2006 boom times, only around 45% of home loan applications are currently successful.

“Banks are also taking the buyer profile into consideration when granting bonds. In the boom times approximately 25% of all buyers were investors. These days, owner-occupiers make up more than 90% of bond applications, a clear indicator that speculation has not returned to the market.”

And, Botha says, while South Africa is recovering from the financial crisis, it doesn’t mean that home loans are going to reach the approval rates they did before. “In fact, we are only hoping to reach a 60% approval rate within the next 12 months.”

The majority of homeowners now have to have equity in the form of a deposit if they want to buy a house,” he says, “as 100% home loans are very limited, and are mostly only available to first time homebuyers in the affordable market.

“This means that financial institutions take the ratio of debt to income quite seriously, and consider not only whether or not the buyer can afford the monthly bond repayments, but whether they can cover the immediate costs such as the deposit, transfer costs and legal fees as well.”

Botha believes that there is currently a healthy balance in the system, and that while the banks current lending policies may inhibit a growth explosion, they will encourage the sound and steady upward trend in the market.

This article has been reprinted with the kind permission of Betterbond
Tel: 011 516 5500
Fax: 086 676 9256

June 1, 2010 Posted by | The Real Estate Market | Leave a comment