2014 Gauteng Homemakers Expo

The 2014 Gauteng Homemakers Expo is presenting bold, bright and individual ideas and products covering all the latest trends on the home front.

Visitors can also expect the Repurpose recycling feature, which will be showcasing an incredible new take on repurposing and up-cycled items.

From 27 February to 2 March 2014, the Coca Cola Dome in Northriding will be a showground of local talent, inspiration from across the globe and practical know-how demonstrations from the experts.

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Interest rates hike and your money

In an unexpected move last week, the Reserve Bank of South Africa (SARB) hiked interest ratesby 50 basis points to 5.5 percent per annum from 5.0 percent as of 30 January, as a result, commercial banks raised their prime lending and variable mortgage rates to 9 percent per annum from the same date.

Lezanne Human, chief executive officer of FNB Savings and Investments, says this increase brings with it an increase in the cost of servicing debt, which means that manySouth Africans will have less disposable income than before.

According to Peter Attard Montalto, Nomura research analyst, they see this hike as the beginning of a 200 to 250 basis points hiking cycle that should be completed by the middle of 2015, in fact, he says we can expect another two hikes this year and most likely in the second half.

The key motivating factor behind the decision to raise the repo rate was the deterioration in the SARB’s assessment of the inflation outlook, explains Investec’s Annabel Bishop.

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Stronger house price growth in 2014

While the average house price growth was nominally lower during 2013 than it was in 2012, the housing market is still moving in the right direction and prices are on an upward trend, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

“The fact is that property remains a solid asset class that continues to provide buyers with a good return over the long term – provided the correct purchasing principals are applied to the transaction. Although property prices are currently only seeing single figure growth, the compound effect of the upward growth trend of property prices will positively impact on the homeowners net worth in the future,” says Goslett. “Potential property buyers who are waiting in the wings and holding out for the next boom are losing valuable growth as property prices increase yearly.”

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Interest rates and the property market

While inflationary concerns and global economic impacts remain in the spotlight, the Monetary Policy Committee’s stance to increase the repo rate stable was unexpected, particularly given the sluggish economic growth currently experienced in South Africa, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

Golding notes that the South African Reserve Bank has hiked its interest rate by 50 basis points as of 30 January, Governor Gill Marcus announced on Wednesday.

Golding notes that the South African Reserve Bank has hiked its interest rate by 50 basis points as of 30 January, Governor Gill Marcus announced on  Wednesday.

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About property and home loans

BetterBond Home Loans data reveals an increase in the percentage of home loan applicants – a figure sitting at 5.06 percent in the 12 months to end of October compared with the previous 12 months, while the total value of those applications showed a 12.26 percent year-on-year (y/y) increase.

According to the mortgage originators, the approval rate on loan applications proves that using a bond originator gives one a better chance of obtaining a home loan in the shortest possible time.

They also point to the fact that the quality of applications has improved with BetterBond noting that they are able to assist applicants to gather all required supporting documentation before submitting an application to the bank.

That said, interest rates are currently at historical lows which means home loan finance is affordable and of course we are told it is a buyer’s market.

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Affordability is a key factor when it comes to obtaining the necessary finance for buying property and the fact is that many consumers today simply don’t have the affordability ratios required by the banks

The Secrets of Wealthy Individuals

One of the secrets of the wealthy is to make inflation work for them, not against them, as it does for the majority of people.

One of the secrets of the wealthy is to make inflation work for them, not against them, as it does for the majority of people.

Unfortunately, few South Africans really understand what inflation is, and the devastating effect it has on our financial futures, according to Dr Koos du Toit, chief executive officer of P3 Investment Group.

Du Toit explains that in September 2013, the annual inflation rate was 6 percent, just within SARB’s target range of 3 to 6 percent.

What this means is that it costs 6 percent more than it did last year to buy the same ‘shopping basket’ of goods and services.

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How will the Credit Amnesty Act affect the property market?

Despite industry objections to the removal of adverse credit information from the credit bureau databases, last month the Cabinet made the decision that all blacklisting will be removed from around 1.6 million consumers’ records. The decision to wipe the negative credit information was taken in an attempt re-enter these consumers into the market, which should, in turn, boost consumer demand and spending.

While this is good news for consumers who have paid all their debts but are still prevented from accessing further credit due to their bad credit listing, the credit amnesty bill may have the opposite effect in the housing market to what was initially intended, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

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