18 December 2005
The bubble inflated, then burst, then inflated again. Now finally it looks as if property prices are seemingly slowing or even decreasing. According to Robyn Farrell, director of 1 st for Women, “Now could be the right time for South African women to take a page out of celebrity property moguls such as Britney Spears, Angelina Jolie and Catherine Zeta-Jones’s book, and invest in the booming South African property market.”
“An article on the website cyberprop.com reported earlier this year that, on a month-on-month basis, nominal growth in house prices was 0.6% in April this year, compared with 0.8% in March. According to ABSA, the current declining trend in month-on-month growth started in January 2004. While the growth is still continuing, it has definitely slowed. This does not however mean that prices are coming down – at this stage, prices are remaining at the same levels rather than increasing. This is good news for those looking for independence, empowerment and an excellent investment opportunity,” said Farrell.
According to the Absa House Price Index, in a statement released on 3 November 2005 , “Nominal house price growth, declined further in October 2005 to 15,8% year-on-year. Absa said that this was the lowest year-on-year growth since August 2002 when it was 15,9%. The current declining trend in house price growth is expected to continue into 2006, largely driven by higher interest rates during the course of the next twelve months. As a result, nominal house price growth of between 5% and 10% is projected for next year. This implies that nominal house prices may decline on a month-on-month basis at some stage in 2006.”
“Women are an economic force in the country today and it is said that women tend to make excellent property investors because they were often better able to visualise the potential of a house . Moving into your own home only when you’re married is a thing of the past, women should be shifting social norms and traditions and take advantage of this optimistic period in the property market,” says Farrell.
While the time might be ripe for buyers who can afford to purchase a house at the current prices, potential homeowners must bear in mind that there are a number of hidden costs associated with buying a home. These include costs such as transfer fees, bond costs, home loan initiation fees and deeds office registration fees, as well as the expense of moving and connecting water and electricity. In addition, a homeowner is required legally to have homeowners’ insurance, which protects the actual structure, thereby protecting the investment of the financial institution with whom you have your bond. All of these add up to a very expensive exercise that is not for the financially unstable. According to Iona Minton and Dave Welmans in their book, “The Property Game: A Guide to Property Ownership in South Africa ”, there are two main reasons for homeowners’ insurance, namely protecting your house and other structures; and protecting your personal property. They also remind homeowners that, while your monthly insurance premiums aren’t buying a tangible product, you are buying peace of mind.
Farrell concludes, “Buyers must remember that the choice of who to take out homeowners insurance with is always yours. While the financial institution who grants you your bond can give you suggestions on who to use for your insurance needs, you are not obliged to opt for their suggestions. As always with any financial decision, it is terribly important to shop around for the insurance product that best suits your particular budget and needs.”
1 st for Women Insurance offers women “Cover with Care”. For more information on 1 st for Women Insurance Brokers, visit www.firstforwomen.co.za