News & Advice

Submited on 25 May 2010 written by Sipke Beyl

The market today. May 2010

Because of the many holidays in April the market was fairly flat and most Agencies reported low levels of activity. With many people away over this period or having holiday guests, puts a damper on show houses and normal viewing hours.
However the market seems to have picked up again in early May and is back to its pre April levels of activity.
A number of new properties have come on the market and out of curiosity checked back over the last ten months or so. My interest is in the housing market above the R1 million and my records show that form the start of the year ever month more properties come on the market.
At present 40 to 45 new properties with an asking price over a million come on the market in Glenwood, Berea and Morningside. This is up from 20 to 30 for the same period last year.
That points to an 25% increase in market activity, which is borne out by recent figures released by the banks.
The banks report an increase in Bond applications and that most applications received are between R500k and R1, 500K. But 47% of these are rejected because of affordability and financial track record issues. Of these 15% are approved after further motivation.
This means that out of a ten sale agreements signed only 6 see the light of day.
The banks further report that whilst the number of bond application has increased, there has been very little increase in average value in this market segment. More houses being sold, yes, but a yet no upwards movement in values and that is exactly what we are finding.
Buyers will put in offers but they are to a to a large extend well below the asking prices which have moved up by sellers expectation that the market has improved.
Bank economists report that they expect the market to remain like this for some time to come at least until the second half of 2011, as they expect the Reserve Bank to keep interest rates at these levels before starting to curve up again.
Banks are still concerned about issues like job and business prospects in the current economic climate and therefore client’s ability to maintain a healthy repayment profile.
They are unlikely to further relax lending criteria further and 100% bonds are only available to clients with impeccable credit records and good levels of disposable income.
Buyers with not such a good record can still get bonds but are asked to come up with a deposit and may be penalized by a higher rate of interest. But don’t despair banks will take this in review once you have established a good repayment profile.
In short this all means that sellers should keep their prices competitive as buyers have lots to choose from.