Happy Ballito: Innovation & Marketing (The Bugle)

Every now and again something extra-ordinary happens that inspires and encourages and entire town or city. This happened to Ballito last week with the release of the “Happy Ballito” video – a local version of the Happy song by Pharrell Williams. The official version was released on YouTube on 21 Nov 2013 and has over 259 million views and over 1,6 million likes. The song was written and produced by Pharrell Williams and released by Columbia Records, which is a division of Sony Music. The song peaked at number one in the US, UK, Australia, Ireland, New Zealand and 19 other countries. It is also recognizable from the soundtrack of the movie Despicable Me 2. People all around the word were inspired to make their own version, which they posted on YouTube. From New York, L.A., London, Rio and every place in between local versions were posted on-line. Slovakia has a version set on a snow capped mountain-top with bikini clad models dancing and singing, which may explain the over 3 million views they received. The six Iranians from Tehran who produced their version made headline news when they were arrested because of it. 

My wife, Jane Wassenaar, picked up on the on-line success of this song, and after seeing the excellent version by Cape Town suggested that we make a local Ballito version. As Seeff Dolphin Coast we got moving. Our larger than life Sales & Marketing Director, Tim Johnson, hooked up with Karl Worner from I love Ballito, and together with Tim Hay of Hellmot Productions and Julie Robert of Sugar Dance put together a world class production with the amazing support of the super special people of Ballito. The first public screening of the final version was last Tuesday night at the Seeff National Convention held at Arabella, where we challenged the other 200 Seeff offices around the country to make their own version. The next day we launched the video to around 100 invited guests who attended our function at La Piazza at The Well in Ballito. It was released on YouTube the same evening and has already attracted over 17,000 views. 

Within a day we had received calls from Mr Price wanting to use it in their promotion of the Mr Price Pro this year, and Sony Music Africa who tweeted it to their followers. East Coast Radio picked up on it and gave it a mention. If you are running a business and still wondering if social media is important as a way to communicate then you are asking the wrong question. The social media platforms have revolutionized the way we all communicate and have truly made the world a small, inter-connected village. There are two things you have to get right in any business, of any size and across any industry, if you are going to remain relevant and profitable. Marketing and Innovation, the rest are details. I believe that with the release of the Happy Ballito video we have achieved both. It was a great privilege for Seeff Dolphin Coast to walk away with the top two National Seeff Awards within our division for Marketer of the Year and Licensee of the Year. Our aim is that the Happy Ballito video will make people proud of where they live as well as inspire and motivate others to migrate here – and possibly purchase a property in the area from us while at it.

Published in The Bugle, 28 May 2014, Author: Andreas Wassenaar

Property Surges - Economists Cautious (The Bugle)

If there is one good reason to own a holiday home in KZN it is the month of May. Unmatched in terms of weather, we enjoy the best of the sunny mild conditions while the rest of the country starts to realise that winter is here. Selling a property in KZN in winter is possibly even better than summer and the seasonal aspect of marketing a home is a non-issue for us. Our Seeff Dolphin Coast office is currently leading the sales race for KZN and is firmly positioned as a top ten Seeff branch nationally. We are enjoying the results of a surge in buying by people migrating into our area from Gauteng and Pretoria suburbs and from the suburbs to the south of Ballito as people make the decision to move northwards. This is the natural path of expansion given that Umhlanga Ridge represents the new town centre and business hub and the airport makes commuting convenient and a reality for many people living on the north coast. 

Prices in any market reflect a host of information and buying behaviour. Tracking prices therefore becomes an essential part of monitoring our real estate market. The commercial banks in South Africa provide the best statistics on home prices and it is often instructive to review the house price indices of the main banks to get a sense of current and expected future market activity. FNB’s published house price index recorded year-on-year growth of 8% in April 2014 , slightly down on the 8.1% recorded in March 2014. The growth figures for the preceding two months were 8.3% and 8.5% respectively. Once we adjust for CPI inflation the real house price growth is 1.93% for March, down from 2.3% in February 2014. Our inflation rate is currently 6.05%. House prices reflect the demand and supply of property. As demand increases and the supply is constrained to represented shortages in the market, prices react quickly to balance the supply with prevailing demand. Increases in prices therefore indicate improving market conditions and the current levels of year-on-year growth are the best we have seen since April 2008. From August 2008 through November 2009 negative growth rates were recorded and the very slow and gradual improvement has only occurred since December 2009.  The levels we now see are by far the best we have experienced over the past 6 years. 

The economists are now pointing to slower rates of growth and warning that this could indicate a tighter property market in the second half of 2014. There are a few indicators supporting this view. The SARB leading business cycle indicator showed a -2,8% year-on-year decline, which as we know is incredibly closely correlated with mortgage extensions and property sales. The number of insolvencies recorded has risen suggesting a mild deterioration in household sector credit health. New car sales are often quoted as a good leading indicator of general economic activity. The April 2014 sales volumes figures published by the national association of automobile manufacturers of South Africa fell by -10.6%. So while there are warning signs on the horizon of potentially tougher times ahead, the property sales figures we are reporting are at an all time high. This activity therefore seems counter cyclical and subject to change. We see that on a national basis our average time that a property remains on the market has declined to 13.6 weeks (from 15.3 weeks in Q4 of 2013), that the percentage of properties sold at less than the asking price has decreased to 81%  (from 85% in Q4 of 2013) and that the percentage of properties on the market for 3 months or more has declined sharply to 66% from 74% in the last quarter of 2013. These are significant improvements and point to a far more active property market.

Published in The Bugle, 21 May 2014, Author: Andreas Wassenaar

Rand Decline Encourages Foreign Buying (The Bugle)

Politics dominated the press over the past week with election results posted, the winners celebrating, the losers weeping and the rest of us feeling satisfied that our maturing democracy is on track and our constitution holding firm. It is business as usual in the property market. Our Rand exchange rate has continued to strengthen from the February 2014 spike. Currently averaging 10.49 Rands to the Dollar for May 2014, this is an improvement from the February average of R11.12. The number of foreign buyers spiked in the first quarter as the smart money realised that this would be a temporary opportunity to take advantage of and invest in South African real estate at a very favourable exchange rate. Fortune favours the brave and those people who did buy and bring in the forex at the right time have already improved their position by almost 6% in three months – probably even before taking transfer. This year to date has provided exceptional growth in market activity in the areas that we service and the first four months of 2014 have already delivered the similar number of transactions we concluded for the first six months of last year. If you are in sales, growth is good and we tend to be driven by targets and exceeding the success of the prior periods. 

One very instructive measure of overall property market activity is the South African Reserve Bank’s measure of transfer duty receipts. The typical transfer takes three months from date of purchase to the final date of registration on which the transfer duty on the transaction is paid across to SARS by the transferring attorney. Even though we have large variations from month to month due to seasonal influences, the smoothed data provide an excellent trend indication of the property market cycle. We have seen that for the three months to March 2014 year-on-year growth in transfer duty receipts was as high as 30,4%, slightly down from the exceptional 35,2% for the three months to February 2014. What does transfer duty receipts data tell us? This indicates both a significantly improved transaction volume growth as well as average price growth. The trend was a sharp acceleration in 2012 and 2013 and now a flattening out in growth at the top end of the cycle. We can expect to see some sideways movement in transfer duty receipts over the next six months and possibly a decline later in the year. The one statistic that is often plotted together with transfer duty receipts is the Reserve Bank’s Leading Business Indicator as the two tend to move in tandem, with the leading indicator being a good predictor of the future property market cycle. Higher expected interest rates, slowing economic growth in terms of lower GDP growth rates and a slowing trend in household disposable income are the key variables providing for a leading indicator that is showing a -2,8% year-on-year decline. This would indicate a near term slowing in the number of property transactions. Sellers and their appointed estate agents can be expected to have to work harder for those sales in the second half of 2014 and buyers will have the comfort that the negotiating power in a property transaction remains with them for now.

Published in The Bugle, 12 May 2014, Author: Andreas Wassenaar

Renovations & Home Maintenance (The Bugle)

The renovations market has recovered strongly over the past 6 months. Last week we focused on the reasons why home owners have been undertaking these home improvements and by doing this en masse have driven the Hardware, Paint and Glass Products category within the Stats SA retail sales measurement to be the highest growth category by far. This week we will analyze the renovations market from a property owners’ perspective and the five distinct categories that are measured by FNB in their estate agent survey. We all know that owning a property comes with a requirement to continuously maintain the property if we are to avoid wear and tear impacting on its value. It is often this maintenance aspect that is the hidden cost of property ownership and when times are tough, it is one of the first aspects that becomes neglected.

 From 2004 the data presented in the survey suggests a long decline in the percentage of homeowners “investing in their properties with a view of adding value”. This is a measure of the highest level of home maintenance and improvement and actually reached an all-time low of 3% of total homeowners in the first half of 2013. This was a dramatic decline from the high of 43% recorded at the beginning of 2004. The good news is that this measurement has recovered recently to 10.5% as at the end of the first quarter of 2014. The next level down refers to those homeowners reported to be “fully maintaining their property and making some improvements”. This category has steadily improved from a low of 27% in 2008 to 44.5% by the first quarter of 2014. The top two categories therefore make up 55% of homeowners and this seems to be what is driving the retail sales of home improvement products. The third category down measures those homeowners “not improving but still maintaining homes”. This group has also grown to a much improved 35.5% and it would be expected that homeowners would migrate upwards from this category as our general economic environment improved. The fourth category refers to those homeowners “only attending the basic maintenance”. This category should ideally be declining, as without any improvement a home will go backward over time. This category increased significantly from 6% in 2004 to 34% in the first quarter of 2009, and has since receded to the current 9.5%. The fifth and last category are those who are “letting the home get run down”. This is simply the worst-case scenario and as estate agents we witness this type of value destruction from time to time. Fortunately the size of this group is too small to be relevant. When we do come across a home that is becoming run down, it creates a wonderful buying opportunity for the next person who will then typically take the home straight into the top category of investing in the property to add value. The impact of rising interest rates is the variable, which can quickly cause additional financial stress and could impact on how homeowners approach the maintenance of their properties. For now it is those homeowners that regularly invest in their properties that are achieving the best prices in the market.

Published in The Bugle, 7th May 2014, Author: Andreas Wassenaar