While many housing markets have seen double digit declines in home prices over the past year, South Africa’s prices actually improved. How has South Africa managed to outperform most other markets? See the following article from Property Wire to learn more.
The residential property market in South Africa appears to be coping with the global downturn although concerns about a rising number of foreclosures are increasing.
The average price of a property in South Africa increased by 1.2% year-on-year in June, according to the latest property price index.
However, the figures from Ooba, the biggest mortgage company in the country, should not be taken as a sign that the real estate market has turned for the better, its chief executive is warning.
‘Rather than suggesting a recovery in the market place, this may be attributed to a shift to higher priced properties in June, given affluent homebuyers’ ability to better adapt to strict bank lending practices,’ said Saul Geffen, chief executive of ooba.
The average purchase price according to the oobarometer was R784,427(£59,439) in June 2009, up from R774,449 (£58,683) in June 2008. The month-on-month average purchase price has also increased nominally by 1.4% from £58,657 in May of this year.
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However, the average price of a home being purchased by a first time buyer has fallen by 14.1% year-on-year, a fall of 16.8% in comparison to May 2009.
‘This is a clear indication of the pressure on first time buyers where banks strict credit criteria, particularly their deposit criteria, is making entry into the property market difficult and is having a knock-on effect on property prices at this level,’ added Geffen.
Research shows that property purchasers now require an average deposit of 18.9% of their purchase price in order to secure a home, compared with an average deposit of 12.2% in June last year.
‘Expectations are that the property market will continue to be hindered by the current economic conditions until the end of 2009, with recovery predicted by mid 2010,’ Geffen concluded.
Real estate agents in South Africa are also joining a quick sale scheme that is aimed at helping property owners who need to sell urgently to avoid foreclosure. One agent said it is working incredibly well and his firm has sold more than 62 properties around the country worth R41 million.
Berry Everitt, chief executive officer of Chas Everitt International property group said that it make sense for agents to help struggling home owners avoid having their property repossessed by the banks.
‘It helps both desperate sellers and serious buyers. Home owners who are in trouble can avoid repossession and damage to their credit rating which means that they can get on with their lives without having to carry a debt burden they cannot manage,’ he added.
The Quick Sell Plan was introduced by FNB Home Loans to set up a way that property owners could sell quickly. A minimum reserve price is established on each Quick Sell property and buyers, introduced by the FNB partner agents, are offered mortgages up to 100%.
Such buyers also receive a 50% discount on transfer costs and loan registration, while the agent’s commission is paid by FNB.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.