There exits a very valuable trick in the property trade market. South African trend watchers believe that the UK property market gives a foresight into the local property market future. Before investing in private property or repossessed property they have a look at how the foreign property market is performing. If the UK market indicates positive signs, they feel confident enough to invest in buying a repossessed property. They only need to wait for 6 to 9 months for their repossessed property investment grow.
Maybe too superstitious for many but analysts wouldn’t object to this reasoning and trend for it holds some truth and value. So, let us adopt this brilliant idea and have a look at what could be expected according to this theory.
Tony Clarke, M.D. of Rawson Properties, says that there exists two initiatives that have proved encouraging. The first one is that three of Britain’s largest home builders have recently gone to the market looking for a total of 1.13 billion GBP to restart home building operations. According to The Daily Telegraph at least one other major residential developer will be soon to follow suite. He also said that five other UK home developers have already this year put out money calls to shareholders to initiate new projects.
The Times quoted the chief executive of Barratt, Mark Clare, as saying this is the correct time to recapitalise because the equity markets are more stable and investors are again beginning to look for better returns than they can achieve in the low-interest money market. He says that the company could not afford to lose out on the purchase of any more suitable sites as it had done in the recent bad economic months. Clarke says these comments apply to residential developers in South Africa, many of whom, like Rawson Developers, are again on the hunt for development opportunities.
The second encouraging initiative from the UK property sector has been the banks’ re-entry into the mortgage bond market for affordable homes. This is already witnessed locally. As UK buyers, especially first- time property buyers, are desperately short of cash, the UK lenders have been promoting the concepts of shared ownership or shared equity.
In the concept of shared ownership, the ownership of a property is split between the buyer and a housing association or a private organisation. In the shared equity concept, the owner is allowed to buy his property through two loans - a conventional mortgage and an equity loan.
These are some good initiative schemes that can be taken up in conjunction with another UK concept known as “staircasing” which allows the buyer to kick off with a small share in his property, paying “rent” on a subsidised basis on the remainder of the shares which are still held by the bank or a housing association. The owner could within time of his income rising raise his shareholdings and pay less rent.
Can I hear a boom coming to Sout Africa? Are you ready to claim your share of this opportunity? If not yet, why not consider repossessed property. Repossessed property is property from the FNB, and many other banks’, repo lists. Go and find many repossessed properties priced below its market value.
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There are plenty of bargains currently available, but be aware there is no easy money to be made. If you should buy sectional title property in South Africa, then always ask for the minutes of the last 3 trustee meetings, any minutes of Special General Meetings, and minutes of Annual General Meeting. Always check the latest financials and compare them to the past year. Also, ask for contact no of the chairman instead of the managing agent.
Thanks
Mike
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