House prices depressed in 2011?

The property market is facing a bleak future if the statistics contained in the South African Reserve Bank’s quarterly review are to be believed. It shows that the household-debt-to-disposable-income ratio – a key constraint for the housing market – has actually increased from 78,2% to 78,5% in the third quarter of the year.

However, it points out that the cumulative effects of the easing of monetary policy and the decline in debt-service costs may boost confidence levels and expenditure in the property market next year.

The ratio of debt-servicing costs to disposable income declined from 8,0% to 7,8% while the cumulative interest rates cuts of 150 basis points this year will have an impact on property sales in 2011.

Tendani Mantshimuli, consumer economist at Liberty Retail says that household debt as a percentage of household disposable income increased from 64,3% in 2005 to 80,2% in 2009.

He says that households have been unable to spend the extra money they get when interest rates fall because they use this money to service excessive levels of debt.

The property market has been struggling in the current economic environment even though the Standard Bank’s data showed that house prices actually increased by 3,8% year-on-year while FNB’s data suggests a slightly higher rise of 4,8%.

In the three segments measured by the Absa House Price Index there were clear indications that house price growth was lower in both nominal and real terms in November this year and based on these figures, the major banks are predicting that there will be modest growth of below 5% in 2011.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

 South African residents who on a temporary basis live abroad can qualify for mortgage financing and will not be considered non-residents. The loan amount varies between 80%-100% depending on their individual circumstances. Exchange Control regulations do not apply to them.

However, they must have plans to return to South Africa and an application to emigrate must not have been made. A South African resident who has lived abroad for more than 5 years will be viewed as n non-resident for  the purposes of obtaining mortgage finance in South Africa.

Non Residents

A non resident is a person whose normal place of residence is outside the common monetary area of South Africa.

Non residents can buy property in South Africa, but should they require a mortgage loan it will be subject to foreign exchange approval from the South African Reserve Bank. The mortgage loan may not exceed 50% of the value of the property. The application to the Reserve Bank can be handled by any of the commercial banks through which such a person wishes to deal.

A non-resident may only borrow 100% of his borrowing base.  His borrowing base is funds that he brought into South Africa to buy the property. Proof must be provided that the funds physically came into South Africa, which can be done by the attorneys involved in the property transfer.

Let’s assume a non-resident wants to purchase a property in South Africa for R1 million and he brings R500 000 into South Africa for the purchase. The bank would then be prepared to grant him a loan for the other half. Thus they will be prepared to borrow him a maximum of 50% of the purchase price of the property, should he or she qualify for the loan.

A contract worker is defined as a citizen outside the common monetary area who has taken up temporary residence in South Africa to work in term of a valid work permit. They may be granted the same banking facilities as for SA residents

Contract workers are regarded as SA residents for the purposes of obtaining mortgage finance in South Africa and can therefore can qualify for a 100% mortgage loan.

However, on permanent departure from South Africa the mortgage loan must be reduce to a LTV of 50% 

Temporary residents

Temporary residents (foreign nationals) can qualify for a mortgage loan of up to 100% of the purchase price of the property.

On permanent departure from South Africa, the same principle as for non-resident purchasers will apply and the mortgage loan may have to be reduced to comply with the South African Reserve Bank’s  requirements.

Click Here - To apply for your Home Loan / Mortgage

(011)327-4489 morne@mortgagepluscc.co.za