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IN TRANSFER DUTY EFFECTIVE 23 FEBRUARY 2011

In respect of all offers to purchase dated on/or after the 23RD of February 2011 the transfer duty in respect of natural persons and other entities such as companies, close corporations and trusts will be as follows:-

Purchase price Transfer duty payable
R0 – R600,000 R0
From R600,000 – R1,000,000 3% of the purchase price
From R1,000,000 – R1,500,000 R12 000,00 plus 5% to the purchase price from R1,000,000
From R1,500,000 – unlimited R37 000,00 plus 8% to the purchase price from R1,500,000

MAJOR CHANGE:-

Previously Companies, Close Corporations and Trusts paid an 8% flat rate of the purchase price as transfer duty irrespective of the purchase price which made it very expensive to purchase properties in legal entities. From the 23rd of February 2011 Companies, Close Corporations and Trusts will pay the same transfer duty as natural persons.

EXAMPLES OF SAVINGS:-

Natural persons: Old tariff New tariff Saving

Transfer on purchase price of R1,000,000 R 25,000 R12 000 R13 000
Transfer on purchase price of R1,500,000 R65,000 R37,000 R28 000

Legal entities:

Transfer on purchase price of R1,000,000 R80,000 R12,000 R68,000
Transfer on purchase price of R1,500,000 R120,000 R37,000 R83,000

The above changes in transfer duty tariffs will be a great boost to the property industry and should be welcomed by everyone involved. (24/02/11)

Latest house prices indices.

ABSA released their house price indices today till Dec. 2011. They categorize houses in 3 groups: Small (80-140m²) Medium (141-220m²) and Large (221-400m²). The real y/y growth for the year 2010 on Small houses was 10.2% that is positive but from their things look a bit more bleak. Medium houses grew by 0.4% and Large houses by -0.6%. If you take all the size houses in one up to a selling price of R3.1M and get the average the real growth was 2.4%. The full report is available on ABSA's website www.absa.co.za. (13/01/2011)

A positive note to start 2011!

Legislation was changed and estate agents need to be qualified before they can legally qualify to do the Estate agency board's exam. This was done to improve the service levels in the industry and change the industry to a profession. We welcome this because it will definitely raise the standards in the profession. Normal agents need a minimum of Real estate Practice NQF4 to qualify. Joan, JP and Marél successfully completed NQF 5 and got their Certificate of Professional Recognition from the Estate agency board as Professional Principal Estate Agents. (13/01/2011)

Prime reduced again!

The reserve bank just lowered the prime lending rate to with 50 basis points again. This makes prime 9% the lowest since the early 70's. This is probably the last cut we will see before the interest rate will slowly start to increase again. (18/11/2010)

ABSA housing review.

I just went through the ABSA housing review for the 4th Quarter 2010 released today. Economic growth is coming down again and is projected at 3% for the year. In the first quarter is was 4.6% is now on 3.2% annualized.

House prices seem to follow this trend and in some segments house prices prices are actually still falling and the other is growing under the inflation rate.

According to ABSA household disposable income is higher but debt levels remain high as well.

The full report can be downloaded from www.absa.co.za

28/10/2010

MPC cuts interest rates again!

Rate cut - 50 basis points. Repo 6.0% and Prime-lending rate 9.5%

The South African Reserve Bank's (Sarb's) monetary policy committee (MPC) has cut the key repo rate by 50 basis points, bringing it down to 6.0%, with the prime lending rate dropping to 9.5%. This will hopefully help the still struggling property market to gain some momentum. Since April we had a decline in property prices again. (09/09/2010)

MPC cuts interest rates!

Rate cut - 50 basis points. Repo 6.5% and Prime-lending rate 10%

The South African Reserve Bank's (Sarb's) monetary policy committee (MPC) has cut the key repo rate by 50 basis points, bringing it down to 6.5%, with the prime lending rate dropping to 10%.
The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers.

Economists were unsure whether favourable inflation data would sway the MPC to lower rates. (25/03/2010)

THE CURRENT MARKET:

The drops in the interest rate is starting to come into play now. Prime is sitting at 10.5% at the moment and the interest rate might still come down again but that is not sure. It takes a few months for the interest rate drops to flow through the market and it is only taking affect now. This means that the market will come alive even more as time progress and all the interest rate cuts come into play. We have seen a huge increase of buyers in the market and our focus is now to get stock to sell. It is not uncommon for a house to be under offer and sold within days if it is priced right. The buyers are well informed and won't pay to much for a house though. The banks are also more willing to give loans and make their lending criteria more flexible. This is truly good news and a good sign for the economy to start recovering. (31/08/09)

INTEREST RATE:

The reserve bank governor Tito Mboweni cut the interest rate again this month by 1%. This makes the prime lending rate 11% from end of May. The previous cuts are starting to flow through into the market now. We are seeing an increase in buyers in the market. The banks however are still very tight with loans and this is a big issue in the market as well. Historically we see the effect of cuts in about 3 months. Currently it seems to be taking a bit longer but we are in the cycle now so every month things should be better and better. (28/05/09)

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