Newsletter - February 2006
What an interesting start to the year! The Monetary Policy Committee (MPC) had its first meeting of 2006,
President Mbeki gave an excellent State of the Nation address, and Trevor Manuel delivered the National
Budget for 2006.
From our side, we have restructured our Service Offering to better suit our clients requirements,
we launched our first commercial properties (great yields!!), and we have FREE investment seminars available!
More on all of these to follow.
IPS Service Update
To help clarify our new Service Offering, we have broken down our services into four key stages:
FIND
New developments
and existing properties
are still available on our website and will be sent out in Property Alerts and text messages. You can sign up for an IPS Account and
have only the properties that match your requirements sent to you by email. You can also allow South Africa's top
estate agents to view your requirements and contact you with suitable properties, all free of charge! Read more about setting up an Account.
FINANCE
IPS Morgages continues to produce amazing results, securing fantastic mortgage deals and pre-approvals for all of our
clients. We pride ourselves on both our personal service as well as the end results, ensuring we are the leader in
providing mortgages to overseas buyers. There is no fee for this service, and is available to everyone - you do not have to buy IPS property to qualify!
PURCHASE
While living overseas, managing the purchase process can be very difficult and time-consuming, especially with new
developments. IPS provides a service to act as a single point of contact, liaising with all the parties involved
- agents, developers, banks, lawyers - to streamline the process. We partner with you throughout this process.
MANAGE
With the current weak rental market, it is of paramount importance to have your unit above the average to get the
best rental return, and ensure that you are working with the best local management agents. When you are overseas,
this again is virtually impossible. IPS offers a service to manage the snagging, clean the unit, manage any refurbishments
or curtain rail installations, and most importantly recommend the best management agents in the area.
In addition, we will continue to run our property workshops and regular property related events.
Recent Property Market News
On the 2nd of February the MPC reviewed its inflation forecast to 4.7%, marginally above the midpoint of the 3-6%
target bracket. However, the committee identified 3 main risk categories: oil prices, food prices, and domestic demand.
In weighing these up against the lower-than-expected inflation outlook, the committee again chose to leave interest
rates unchanged, a trend that several commentators
are expecting to play out over the rest of 2006. Read more about the February MPC meeting.
President Mbeki delivered an eloquent and dignified State of the Nation
address on Friday, the 3rd of February, in which he commented on the progress South Africa has made over the past
decade, and the high level of national confidence in the country at present. He also outlined some of the major
challenges the country continues to face, sounding a “call to arms” for all South Africans to seize the opportunity
and help build a better future.
The issues of land redistribution and of foreign ownership of property in South Africa were also mentioned in the
speech. The government is set to review the “willing-buyer, willing-seller” model in the coming months, while a recent
report on foreign ownership that recommended placing an immediate moratorium on sales to foreigners was
rejected by Land Affairs Minister Thoko Didiza.
Read more on Cees Bruggemans’ take on the challenges and opportunities
facing South Africa.
Most recently, Trevor Manuel delivered his 2006 National Budget on the 15th of February, with a surplus of R46 billion
added tax revenue at his disposal. Two of the major aspects
addressed in the budget are a 9% reduction in the national debt (adding downward pressure on interest rates),
and a 13% increase in government spending (redistributing a large portion of the surplus funds).
From a property perspective, R4.5 billion of “relief” was granted in substantial changes to both the Transfer Duty
brackets and the Primary Residence allowance for Capital Gains Tax. Houses under R500,000 no longer incur Transfer
Duty; between R500,001 and R1 million incurs 5% Transfer Duty, with amounts over R1 million at 8%. The tax rate for
Companies and Trusts will be reduced from 10% to 8%.
The Primary Residence allowance for Capital Gains Tax was raised from R1 million to R1.5 million, and Exchange Controls
have been relaxed from R750,000 to R2 million per person. Click here
for more details on the effects of the budget on the property sector.
If you're interested in reading more about what lies ahead in 2006, read Scott Picken's view.
Commercial Properties
IPS has two excellent commercial opportunities: The Crest,
in KwaZulu-Natal, and Tybalt Square in the booming Midrand.
From an investment perspective, the rental yields generally available in commercial
property are much more attractive than those in the residential market, often covering the mortgage payments up front.
Sectional title commercial property now makes the investment even more attractive by reducing the management
complexities involved, and is currently very popular in South Africa. It provides the best vehicle to start investing
in commercial property. For more information on commercial property investment and sectional title, please click here.
Our first commercial property investment opportunity was recently sent out to all investors with the appropriate subscriptions in their IPS Accounts. To ensure you receive alerts about future Commercial Properties and Investment Opportunities, please create an IPS Account
by clicking here.
FREE Property Investment Workshops in London
If you are interested in Property Investment, Dr. Hannes Dreyer will soon be back in London and is offering FREE investment
seminars! The feedback we have had from our clients is that they would like to be able to come and learn from Dr Dreyer before
they make a substantial investment in his workshop. Thus IPS Property School has arranged 4 evenings, around London and also in
English & Afrikaans, to meet with Dr Dreyer and learn from one of South Africa's foremost property investment experts on the benefits of
property as an investment option, the laws of investing, and various techniques and tips on making a successful investment
in the property market.
We have also uploaded many of the feedback forms we have received from the previous events, which show you how much
people have gained from attending the workshops. Please click here to read them. You have nothing to lose and
if you learn one thing, it will be worth it! Please send on to any friends who may be interested.
For more information on dates and venues (including a seminar to be held in Afrikaans), please click here.
Statistics for Sunninghill
Statistics for the last three months:
- Number of Freehold Properties Sold: 28
- Average Freehold Selling Price: R 1,182,806
- Number of Sectional Title Properties Sold: 52
- Average Sectional Title Size: 96 square meters
- Average Sectional Title Selling Price: R 571,115
- Average Sectional Title Price per Square Meter: R 5,960
With regards to 2006, set your goals, give your best shot in achieving them, and most importantly enjoy the journey!
Enjoy your year.
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