Rosanne Pretorius at RE/MAX Helderberg

08/05/2020

07/05/2020

Interest Rate Cuts Won’t Matter if Real Estate isn’t Reclassified.

At just 7.75%, interest rates are at the lowest level since 1973. The decision to lower interest rates was part of the MPC’s plan to stimulate the economy. But, without allowing real estate services to operate at lockdown level 4, the government is stifling the benefits of their very own recovery strategies.

“To see the full benefits of these interest rate cuts, real estate services must be allowed to operate so that buyers who are incentivized to purchase are able to do so. As things stand, real estate services will only be made available at level two of lockdown – even garden services are allowed to re-open ahead of this. As an industry that contributes about 5% of South Africa’s GDP and that employs 42,000 people in the residential sector alone, we urge government to reconsider their reclassification of the real estate industry so that our economy has a better chance for recovery,” says Adrian Goslett, Regional Owner & CEO for RE/MAX of Southern Africa.

Without this reclassification, the interest rate cuts only make it easier for homeowners to afford the repayments on their home finance.The table below, prepared with help from South Africa’s leading bond originator, BetterBond, explains how much homeowners stand to save on their home loans as a result of the cuts:



To download this graph, click here.

To provide a simplified example of how much a homeowner stands to save, assuming interest rates change on the first of each month, a new homeowner who takes out a R1 million home loan on 1 Feb 2020 at an interest rate of 9.75% and a loan term of 20 years will pay R9,485 on monthly instalments, with a total interest payable over the lifetime of the loan of R1,276, 440. Assuming the interest rate drops to 8.75% on 1 April and then to 7.75% on 1 May, the homeowner would save around R1,275.68 on their monthly repayments (which now amount to roughly R8,209) and around R298,400 on the total interest payable. If they left their repayment at the original R9,485, they would save R579,135 in interest over the remaining life of the loan. The loan term would also decrease by five years.

“Homeowners should note that the interest saving and impact on loan term would be less if the homeowner was further into their home loan term rather than being at the beginning stages of the loan term, as the interest portion of the monthly repayment is highest at the beginning of the loan term and slowly decreases as more and more of the bond is paid off. This is attributable to the power and effect of compound interest,"explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, CEO RE/MAX SA.

“If there is a further drop in interest rate by, say, another 125 basis points (as many economists predict) which becomes effective on, for example, 1 July, this would drop the monthly repayment by a further R753 to R7,456, and save the homeowner a further R172,978 in total interest. They stand to save a total of R754,258 on interest charges should they choose to keep their repayments at the original amount throughout the rate cuts.”

“My advice to homeowners would be, therefore, to keep their repayments the same as they were before the interest rate cuts if they can afford to do so, as this will allow them to save greatly on interest costs and shorten their lending term,” Goslett concludes.

About RE/MAX Worldwide & RE/MAX of Southern Africa

Established in Denver, Colorado in 1973, RE/MAX LLC is recognised as one of the leading international global real estate franchise companies with the most productive sales force in the industry. RE/MAX LLC has over 130,000 agents operating in over 110 countries worldwide.

RE/MAX of Southern Africa, which was founded in 1994, is regarded as the pioneer of the RE/MAX international expansion as it was the first country franchise to be sold outside of North America. With over 2,400 agents operating from over 160 offices and licensed in 5 countries in Southern Africa, RE/MAX of Southern Africa is the largest real estate brand in the region, outnumbering our closest competitor by nearly 1,000 sales associates.

Nobody in the world sells more real estate than RE/MAX.

Issued by RE/MAX of Southern Africa.

Rosanne Pretorius

071 491 3099

[email protected]

07/05/2020

3 Bedroom House for Sale in Fernwood Estate

32 Royal Fern Crescent, Fernwood Estate, Somerset West

https://youtu.be/eyBH2YLJOdE

https://www.property24.com/for-sale/fernwood-estate/somerset-west/western-cape/9116/108597999

04/05/2020

HOW THE ECONOMY WILL COLLAPSE IF REAL ESTATE SERVICES CANNOT OPERATE.

After hearing confirmation that the real estate industry will not be reclassified to operate under level 4 of lockdown restrictions, the real estate industry has joined forces to implore government to reconsider, explaining that this decision affectsnot only the thousands that are employed within this sector, but also has a far reaching impact on the economy as a whole.
“Real Estate is unquestionably a multiplier and enabling industry. During the 2007/08 financial crash in the United States, it was real estate that lead the economy out of the recession and back to economic health and prosperity. We believe that this sector can assist South Africa in doing so again,”explains Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
To back this statement, Goslett quotes the Quarterly Financial Statistics report for December 2019released by Statistics South Africa that states just how much the real estate industry contributes to the South African economy and, subsequently, to the tax base. In September 2019, Real Estate contributed 11,2% and in December 2019 11,5% as a percentage contribution to total turnover.
“Real Estate in isolation contributes about 5% of South Africa’s GDP and has approximately 42,000 people that work the residential real estate sector. There are many other organisations, industries and businesses that rely heavily on real estate sector to trade. Banks, originators, conveyances, and many more feed off real estate. Without us, their industry stands still. If they stand still, they will lay-off people and further contribute to rising job losses.”
“Beyond this, the importance of the real estate industry in providing liquidity in the market cannot be over-emphasised. Property to the value of R20 billion register in the Deeds Office every month. This creates much needed liquidity in the market for buyers and sellers. If people are unable to sell their property, then they cannot raise any capital. The number of distressed sellers is on a rapid rise. These homeowners will not have access to finance unless real estate services are allowed to operate. This will cause them to run further into debt, which will increase bank’s risk and will impact their ability to lend.”
“What’s more, if business owners cannot raise capital through the sale of their property to save their businesses, they will have to declare bankruptcy and, along with that, will be forced into terminatingtheir employees. This will lead to even further unemployment rates as a by-product of the real estate industry remaining closed,” Goslett warns.
As things stand in this global pandemic, governments around the world are trying to inject much needed liquidity into the market in order to help the economy through this crisis and on the road to recovery. For this reason, real estate is currently in operation in most other countries in the world. Even Italy, an epicentre of the disease, is allowing real estate to operate in the first phase of alert level easing. “They recognise the contribution that real estate has in the economy and acknowledge that the economy simply cannot function without this essential service.We toobelieve that there is no better industry than the real estate sector to assist in creating enormous liquidity in a short time, especially for the millions of property owners in South Africa.”
As a final consideration, Goslett acknowledges that there is a unique balance that must be found between containing the risk and spread of the virus and the need to reignite the economy and the fiscus. However, real estate is a sector that can operate in such a way that there is very low risk of spreading the disease.
“In my letter to Minister Sisulu at the Department of Human Settlements on 27 April, I outlined how real estate offers minimal threat according to the criteria that were used in establishing the level of risk for each industry. I further outlined how the industry could be regulated to mitigate risk by implementing strict regulations at each level of easing lockdown restrictions. After the ministers have reviewed our submission, I feel frustrated to learn that even garden services are allowed to operate before real estate. These businesses bring crews of 6-10 people at a time through your home, whereas real estate can be limited to 1-1 or even 1-0 if agents are allowed access and are able to do virtual open houses using technology,” Goslett explains.
In conclusion, Goslett and the real estate industry as a whole are extremely concerned that the impact to the South African economy would be detrimentalif real estate is not allowed to operate during level 4 of lockdown. “To help government, wehave even formulated the safety measures required to enable real estate to start trading again in a way that addresses the health and safety concerns of all citizens. We commit to working with the government to help with the reclassification and implore them to reconsider their classification of the real estate industry in order to give the economy a fighting chance for recovery,” Goslett concludes.
For more industry news, or to get in touch with a real estate professional from the world’s number one brand in real estate, visit www.remax.co.za.

About RE/MAX Worldwide & RE/MAX of Southern Africa
Established in Denver, Colorado in 1973, RE/MAX LLC is recognised as one of the leading international global real estate franchise companies with the most productive sales force in the industry. RE/MAX LLC has over 125,000 agents operating in over 110 countries worldwide.
RE/MAX of Southern Africa, which was founded in 1994, is regarded as the pioneer of the RE/MAX international expansion as it was the first country franchise to be sold outside of North America. With over 2,400 agents operating from over 160 offices and licensed in 5 countries in Southern Africa, RE/MAX of Southern Africa is the largest real estate brand in the region, outnumbering our closest competitor by nearly 1,000 sales associates.
Nobody in the world sells more real estate than RE/MAX.
Issued by RE/MAX of Southern Africa

Rosanne Pretorius
071 491 3099
[email protected]

23/04/2020

Now you can send Food Vouchers directly to someone's phone via sms!

22/04/2020

We are all going through the same struggles and challenges at the moment. You are invited to please join us tomorrow’s at 10 am for Time Out with RE/MAX event featuring Douglas Kruger for some added value?

Attend a RE/MAX conference from the comfort of your living room! Each Thursday for the next four weeks, RE/MAX has secured a guest speaker to present an insp...

13/04/2020

Even with social distancing.
One can find joy.
In finding the perfect home...

Phone: Rosanne Pretorius
REMAX Helderberg
0714913099
[email protected]