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Latest Stats – Consumers Come Under Pressure with Rising House Prices

Metrosmag,SA

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According to the latest statistics released by BetterLife Home Loans, SA’s biggest mortgage originator*, the national average home price has risen by almost 8% in the year to end-June, compared with 5,9% in the previous 12 months.

However the statistics also show that the rate of home price growth is slowing, having achieved an increase of just 2% in the June quarter, compared with an increase of almost 5% in the first quarter of this year.

“This shows once again the dampening effect that high cost-of-living increases have on the real estate market,” says BetterLife Home Loans CEO Shaun Rademeyer. “This year, there has not been much extra income injected into household budgets by way of salary increases, a large drop in fuel prices like the one that occurred last year or the personal tax cuts usually announced in the Budget.

“And what has come in has been rapidly absorbed, in most cases, by steep food price increases resulting from the ongoing drought in many parts of the country and rising water and electricity costs.”

Sluggish economic growth and rising unemployment have kept the lid on salary increases, he notes, while the Reserve Bank has estimated that food price inflation will almost double this year from 5,9% recorded in December 2015 to 11%.

“Meanwhile the average household is already dealing with higher debt repayments thanks to the two interest rate increases announced this year, and the annual increases in water and electricity tariffs just announced by most municipalities, which average around 10%.

“In short, most consumers are struggling to make ends meet, and while the demand for property remains high, the decline in discretionary incomes is increasingly limiting what potential buyers are able to afford – and what banks are prepared to lend them.”

Rademeyer says that the banks are, however, still favouring secured lending products such as home loans, and that the percentage of home loan applications being declined outright has dropped to 27% in the past year from 28% in the previous 12 months.

“In addition, we help customers gain a better understanding of their affordability by analysing their ITC scores and providing innovative solutions to improve these scores. This also helps the banks reduce operational costs and further improves our partnerships with them.”

Meanwhile, he says, consumers are placing larger deposits on their home purchases, possibly due to the favourable interest rates they receive when doing so. “Indeed, our statistics show that 52% of all prospective buyers are putting down more than 10% of the purchase price, with the current average being 21% of the purchase price.”

In the first-time-buyer sector of the market, continued strong demand is indicated by a 6,2% increase in the average home price in the year to end-June, compared to a 3,8% increase in the previous 12 months, he says.

“In addition, first-time-buyers continue to account for 46% of all home loan applications, and almost a third of all home loan approvals, even though this sector has also seen cash deposit requirements rise from an average of 11% to an average of 12% in the past 12 months.

“Our expectation, though, is that it is going to become increasingly tough for prospective buyers at all levels to secure home loans, and increasingly advisable for them to apply through reputable mortgage originators who can prepare, motivate and manage their applications in a way that ensure their best chance of success.

“As things stand, those who apply on their own currently only have a 35% chance that their application will be approved, while we are still able to secure approvals for three out of every four applications that we submit.”

Metrosmag,sa ( inspired by Mzansi Lifestyle ) Mzansi is rich in Lifestyle, a nation diverse in race and culture. Mzansi Magazine explores the rich heritage , versitile culture and the celebrations of Life in Mzansi. Metros Magazine, SA is South Africa's informative Metropolitan lifestlye magazine with all the fresh and important news in Mzansi.

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Investments

Santam advert is getting everyone thinking insurance

David Aladegbaiye Patricks

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“What Could Go Wrong?” - switch to Salam - Youtube screenshot

“What Could Go Wrong?”

Insurance adverts in South Africa are usually somewhat boring and most insurance companies have been doing adverts worse in recent times. There are even insurance companies who themselves fail to handle an irate client gone viral.

When Insurance topics are ignored by the working class, it is easily a reflection of what is not done right. So on Saturday, the tables were turned and for the very first time, an advert was cheered by a group of friends at a gathering. It was a Santam advert and the insurers received several quote requests. So what is so special about the advert.

Price is not everything

Insurance companies like to focus on price rather than expectation and force potential clients to the brink when they concentrate more on “cost savings” and ignore what can be saved. In this advert the viewer is denied the expected, nothing was discussed about price or rate, we were not given a chance to switch off our reasoning when introduced to a sequence of beautiful scenes without mentioning price.

Consumers are more Intelligent

The television commercial depicts scenarios from the surge of innovation that are currently in place and the plans for the future. The consumer is made conscious of reality and given an opportunity to reason on the current state of risk associated with technology and development. This makes the viewer feel in control, and this takes away the ” forced to buy” aspect of risk products. The advert makes consumers think of what could be managed in advance.

Risk protection should be a friendlier topic

When the drone scene pops, most people would laugh, we can all recall the flamed phones incidence that was depicted with the princess on the couch that drop her phone, these are all topics that are recent and more relative to a broad case of people and age. This is friendlier than watching a wretched car on a field with no phone answered, or a fire trapped family, insurers must move from traumatic displays to a more enjoyable and intelligent advert.

We believe santam when they say “When things go wrong, wouldn’t you want to be with the insurer that makes it right” because they spoke to consumers the right way.

If insurers take this route, consumers would be more convinced of what they are offered.



Conceptualized by the King James Group, the TV campaign provides a view into a future that’s fast becoming a current reality. Devin Kennedy, Executive Creative Director at King James says, “Digital disruptions are happening so fast it’s hard to keep up. A bold insurer identifies rising trends and quickly adapts to underwrite new risks. In this commercial, Santam shows that they’re at the forefront of technological change and are already asking the difficult question of “What Could Go Wrong?”

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Gauteng

Building bridges: better links to Sandton Central for everyone

Metrosmag,SA

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Big inroads are being made improving access for everyone travelling into, out of and around Sandton Central, South Africa’s financial hub. Some of the largest positive impacts have come from building new bridges.

Three new bridges will connect Sandton Central in a way that improves transport for the area and forges stronger bonds between different communities.

“Sandton Central is South Africa’s cosmopolitan centre of trade, ideas, interaction and lifestyle. Excellent accessibility plays a key role in this. Ensuring that people can easily come to work, visit, stay, shop, or be entertained in Sandton Central is something we take seriously. We strive to provide an exceptional experience,” says Elaine Jack, City Improvement District Manager of the Sandton Central Management District (SCMD), which manages the public urban spaces of this leading city.

Over 10,000 people walk between neighbouring Alexandra and Sandton Central every day. The City of Joburg is bringing pro-poor high-quality public transport that is safe, affordable and reliable to the people of Alexandra and Sandton. Also, it is making walking and cycling easier, safer and more convenient.

“We are addressing the ill effects of the past and implementing programmes that are stitching the city together, ensuring that economic opportunities and services are closer to the people. This allows people to live, work, play and pray in a much more cost-effective and efficient manner,” says Cllr Nonhlanhla Helen Makhuba, MMC for Transport in the City of Johannesburg.

The Marlboro Rea Vaya bus and pedestrian bridge

Almost complete, this bridge is for exclusive use by Rea Vaya buses and pedestrians. It will launch in September/October 2017. The bridge is already open for pedestrians. Rea Vaya buses will have exclusive use of the bridge when the Rea Vaya Phase 1C(a) operations begin in October 2018. The bridge will make it possible for buses and pedestrians to move swiftly from Johannesburg CBD via Wynberg and Alexandra over the M1 and into Sandton Central.

The Grayston pedestrian and cyclist bridge

This non-motorist bridge for walking and cycling is under construction over the M1 highway at Grayston Drive. It will be completed by October this year. This bridge will provide a convenient and safe walking and cycling trip for people moving between Alexandra, Wynberg and Sandton Central daily. The bridge is part of a five kilometre dedicated walk and cycle route that starts in No 3 Square in the heart of Alexandra and ends in Sandton Central. The route also intersects with the Watt Street Rea Vaya station, which is right next to Pan Africa Mall. Thus, it helps people walk safely to this important station which connects Alexandra with the Joburg CBD (inner-city) and Sandton Central.

The Zandspruit bridge

Big improvements to this bridge have opened up a former bottleneck for private vehicles at a very popular access point to Sandton Central. Widening the Zandspruit Bridge and Katherine Street all the way to the M1 highway Marlboro Drive off/on ramp has already improved traffic mobility between Sandton Central and the M1 Marlboro off/on ramp.

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Investments

Don’t overlook insuring your partner’s parents

Metrosmag,SA

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Couples in long-term committed relationships often find themselves having to support their spouses financially when one of their in-laws who doesn’t have adequate funeral insurance passes away.

Lee Bromfield, CEO of FNB Life, says “Even if you have funeral cover for your own parents, you may find yourself in a financial predicament if one of your uninsured in-laws passes away as your spouse may rely on you for emotional and financial support.”

For consumers who are currently bearing the brunt of tough economic conditions, this can be a huge set back given that burial expenses will be paid out of pocket.

“When you are in a long-term relationship some financial responsibilities often have to be shared. As a result, taking out funeral cover for both in-laws should become a priority for couples,” adds Bromfield.

He says many couples find themselves in financial difficulties even post the funeral due to additional costs such as a tombstone unveiling, which are absorbed from the family’s budget and savings.

This is often followed by funeral expenses for extended family members who rely on one of the spouses for financial support.

“Some couples in this situation often have to approach loan sharks, take out personal loans and exhaust credit cards, which has a negative impact on their finances in the long term,” says Bromfield.

He advises couples to take time planning and assessing both their financial responsibilities to avoid paying for costly unforeseen events such as the passing away of a relative.

Bromfield emphasises the importance of couples deciding together who should cover their parents and extended family as well as the amount of cover necessary to afford them a dignified send-off.

“A common mistake that spouses make when insuring in-laws and extended family is taking out multiple policies. It is more cost effective to combine policies than taking out cover with different insurers,” he adds.

Couples shouldn’t wait until their parents reach retirement age to take out funeral cover as premiums will be more expensive. Moreover, there is often a waiting period for new policies that has to be factored in.

“Don’t let poor planning come between you and your partner’s financial wellbeing,” says Bromfield.

FNB Life offers funeral cover policies up to R100 000 and up to 21 family members on a single plan.

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