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Property prices in South Africa recorded a positive year-on-year growth of 6.2 percent in December 2011, according to mortgage originator stats. The mortgage originators says although this increase is a positive development for the local residential property market, it predicts that the market will continue to trade sideways in 2012. The December  price index’s revealed that the average house price rose to R870 564 from R819 977 a year earlier.

A month-on-month increase of 3.6 percent was also recorded in December.

The growth in the average purchase price among first time buyers showed a significant increase, with year-on-year (y/y) growth of 14.5 percent to R656 230 in December 2011 from R573 112 a year earlier.Saul Geffen, anticipates that residential property prices will continue to drift sideways throughout 2012 and doesn’t expect the average annual property price growth to exceed inflation by much this year. According to other indicators tracked by Bond Originators, the average approved bond size increased 3.6 percent y/y in December to R722 529 from R697 572 in 2010. The average deposit as a percentage of purchase price increased by 14.1 percent y/y to R148 035, which is an equivalent to the average deposit of 17.0 percent of the purchase price.

Data indicated that the initial bank decline ratio has increased by 6.2 percent y/y to 51.7 percent and the effective approval ratio decreased y/y by 8 percent.

Geffen says the effective approval ratio has been influenced by the changed mix of applications received in December, which typically have lower approval rates.

December applications usually result in a larger rollover of conversions to the following month, given the holidays towards the end of the month, he says.

“With the interest rate anticipated to remain low in 2012 and with property prices remaining depressed the current market represents a favourable environment for buyers.”

Herschel Jawitz chief executive officer of Jawitz Properties believes that even without an interest rate cut by the Reserve Bank on Thursday this is a still a good time to buy a property in South Africa.

“A rate cut would certainly give consumers and buyers a short term impetus to get into the market, but what is not needed is a short term cut in rates followed by an increase in rates later in the year.”

Jawitz says stability and consumer confidence play a critical part in the residential market because without these factors, long term buying decisions cease to exist.

He points out that with property values in real terms as they were in 2007 and rates still at historic lows, the market is offering value but not bargains.

“Provided a long term view is taken, now is a good time to buy.”

The year 2012 is set to excite buyers even more thanks to Absa, one of the big four banks that has decided to grant 100 percent home loans from mortgage originators.

Lew Geffen, chairman of Sotheby’s International Realty in South Africa says after a three year lull, the battle of the banks for home loan market share is about to heat up again benefiting homebuyers and the property market in general.

“This month’s decision by major lender Absa to once again start accepting applications for 100 percent loans from mortgage originators we believe is just the first salvo in the renewed battle,” he says.

Geffen says this move will prompt counter-measures from other banks anxious to retain and gain top quality clients.

He says most lenders are already offering bonds of up to 100 percent to their existing clients in good standing and bonds of 90 percent on average to new clients.

“I am not suggesting that banks will immediately relax their lending criteria. “

“Bond applicants will still need to have excellent credit records, low debt levels and good employment prospects in order to be approved.”

He says just now perhaps they won’t need to have such a large sum of cash on hand to pay a deposit and cover transfer costs.

If inflation tails down later this year as expected, the banks will probably also become more negotiable once again on interest rates.

He explains that bond applicants can expect higher levels of service and faster response times, as banks increasingly relearn that home loan borrowers are very often the most loyal consumers.

Geffen says the results of this shift in attitude will be an increase in the number of loans granted and a decrease in the number of repeat sales for estate agents.

Savvy investors have been watching the market carefully noting that the Cape West Coast is the place to buy into.

According to Justus Brandt, broker/owner of RE/MAX Sunset Coast, whose office services the area from Paternoster to Elands Bay along the Cape West Coast, this property location is one of the hottest and most-sought after nodes among investors.

The areas along the Cape West Coast consist mostly of holiday homes and retirement properties with the majority of property investors coming from other regions.

“Buyers include local retirees and business people to holiday makers and overseas investors.”

Demand for property has been good in 2011 with the expected increase in sales compared to 2010 during the holiday period, especially in Shelley Point Golf Estate, On Golden Mile and Britannia Bay, he says.Brandt says popular properties among investors are houses that are priced up to R1.5 million featuring three bedrooms, two bathrooms with double garage in one of the above mentioned areas.

Most buyers look for properties with a sea view or a location close enough to the beach so that they can take long walks.

Brandt notes that property options along the Cape West Coast cater for a wide range of buyers looking to purchase either vacant stands or homes.

Property prices in the region range from around R160 000 for vacant land to R2.8 million for a beachfront stand in a golf estate.

Vacant small holdings are available from R595 000, while recent house sales reflect selling prices from R575 000 for an entry-level, two-bedroom dwelling to between R950 000 and R1.95 million for a mid-level, three-bedroom, double-story house.Smallholdings typically sell between R1.8 million and R2.2 million while top-level homes start at approximately R2.5 million up to R10 million.

With banks set to loosen their purse strings and grant as much as 100 percent home loans, it might be a good time to buy in Cape Town’s sought-after suburb, the Atlantic Seaboard.

Pam Golding Properties (PGP) reports that despite fluctuating property market conditions, this location continues to retain sound value investment.

PGP points to the appreciation in value of apartments in one iconic building as a prime example. The President occupies a front row position in Bantry Bay, ocean views from every unit with one penthouse apartment selling for R28 million.Atlantic Seaboard and City Bowl, Basil Moraitis, PGP area manager says The President was built in the early 1990s by Sanlam and at the time, its 58 apartments commanded prices in the range of R5 000 to R10 000 per square metre.

That pricing held steady for about five years, then increased to around R12 000 to R15 000 per square metre in 1998, in 2003, the price was R20 000 per square metre.

In 2006, the cost leaped to R40 000 per square metre and it continued escalating to over R55 000 per square metre by 2008 and R60 000 per square metre by 2010, he says. Last year, new sales in the building were concluded in the R50 000 to R60 000 per square metre price range.

The President is one of the best-maintained buildings on the Atlantic Seaboard and coupled with steadily increasing values, this makes it a must-buy property into location, he says. “With 24-hour manned security, the building is the ideal home for those seeking a secure and convenient lock-up apartment, either for holiday or permanent use.” – Denise Mhlanga

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

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Without prejudice to my rights!

To whom this my concern

I am Morne Prinsloo, the owner of Mortgage Plus and in my view and years of expertise in the home loan industry, there is a  definite need for  Originators, to stand together and get the job done!   As dedicated and devoted bond originators in South Africa we would have to work together to make this Industry a successful, professional and a reliable service, to all our consumers in the property market.

For example, I had a client yesterday that I could not help with a new home loan because of the banks not willing to work together with the originator channels and between themselves. In the mean time, the consumer “client” is suffering.

The abovementioned client had made an offer to purchase which he  signed through an  estate agent, The client approached me for professional advice and ask me if I could assist him with his home loan application form. UNFORTUNATELY, I had to show him away because of the existing terms and conditions between the banks and originators. We need to work together and not  against one another.

I have noticed  this every single day for the past 6 years and yet no one is ever willing to stand up and do something about it.

Within the new Consumer Protection Act  it clearly states that the consumer has a choice where and with whom he wanted to do business with and the client should have the option of making sure that he obtained a loan from a Financial Services Provider of his choice

For instance, the property that the abovementioned client put an offer in  on is a PIP (property in possession) property from ABSA bank,  so Nedbank and First National Bank wouldn’t assist him according to their rules and so that left me with Standard bank and Absa only. Standard bank would look at the client,  but because he is an  Absa client, however  they will only assist us with a 90% bond “if we’re lucky”. Now it leaves me with one option only ABSA.

We could then do the loan through Absa,  but only at 70% LTV (loan to value) BUT! If the client went directly to the branch, they would offer them a 100% home loan and pay their transfer cost?

Generally:

ABSA: Bond Originators do not even submit their deals to Absa anymore because of their stringent terms and conditions: 70% loans through originators and 100% directly through a branch.  My question is,  would  you refer the consumer where you know you’re not going to get the deal through “70% Ltv” or would  you rather then go to the opposition for example First National Bank where there’s a much bigger chance to get the deal through at a higher percentage loan?

Standard Bank:  Advertise discounts on legal fees and bigger loans through the media to get direct business and grow their  market share, but what about the thousands of Bond Originators and Estate Agents out there in the market that was always  willing to give you the business in the recent past history?

Nedbank: Everybody took a “knock” during the recession, but it is impossible do business through your bond originating channel, but in the same breath they are financing a Lynnwood Bridge Office Park Development in Pretoria for R 1.2 Billion.

First National Bank: All compliments to FNB,  reason being that everything is above board and across the board with no “hidden Agenda”, so to speak!  What goes for the one goes for the other and there is no difference if the client went to a branch or submitted through a bond originator.

In conclusion

I would welcome it if we all could work together again in order to provide the best service and relevant package to the consumer!

The market is booming! and we need the assistance and back up from OUR  Financial Institutions,  for the consumer’s sake.

AT MORTGAGE PLUS WE ARE GEARED TO CONTINUE OUR EXCELLENT WORKING RELATIONSHIPS WITH OUR CLIENTS AND THE BANKS COULD ASSIST AND ENHANCE THIS VERY IMPORTANT INVESTMENT CHOICE ANY CLIENT WOULD MAKE IN HIS LIFETIME!!

There IS enough business for all! – Article submitted by Mortgage Plus CEO.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za