Property Barometer - September 2012 House Price Index
FNB - South Africa
So what is to be made of the various data and perceptions? We believe it realistic for there to have been some small positive market response to the July interest rate cut, which perhaps still has to be fully seen in price data in the coming months. There is also the coming of summer, which normally has a positive seasonal impact on the residential market.
In addition, a renewed round of central bank stimulus measures has started again, which may in turn lift the global economy off its recent lows.
However, the global economy remains a very troubled place, and stimulus measures can be expected to have only a mild and temporary impact at best, while the residential market still appears unrealistically priced, as reflected in an average time of properties on the market still near to 4 months despite some quarterly improvement. On top of all of this, household indebtedness, as reflected by the household debt-to-disposable income ratio, has resumed its deterioration (increase) during the 1st half of 2012, reaching 76.3% in the 2nd quarter, and this is a key residential demand constraint. And, of course, many aspirant buyers’ ability to fund deposits, when required in order to obtain a home loan, remains constrained by a national net household savings rate of zero percent of disposable income.
As such, while the July interest rate cut may have some mild impact in stalling the slowing year-on-year rate of house price inflation for the next month or two, we remain of the expectation that the FNB House Price Index will end the year on lower year-on-year growth of between 3-5%.
FNB Property Barometer September 2012 House Price Index
Banks hike home loan deposit requirements back to recession levels
BetterBond - South Africa
The average home price rose at an annualised rate of 6.15% in September to R886 000, but the average percentage of purchase price required as a deposit in order to obtain a home loan also continued to accelerate.
It rose to 19,3%, compared to 17,4% in August and 16,5% in July, according to the latest statistics released by BetterBond, SA’s biggest mortgage originator.
“So in spite of lower interest rates and rising levels of affordability, the average homebuyer must once again have almost one fifth of the home purchase price available in cash before applying for a home loan, in addition to the funds required to cover transfer duty, bond registration and legal costs,” says Rudi Botha, CEO of BetterBond.
“This is similar to the situation during the recession of 2008/ 09 and, given the mounting pressures on the lending institutions to lower their risk, we do not anticipate that this trend of increasing deposit requirements will change for some time, meaning that those who are currently on the fence about buying property should do so without further delay.”
Deposit Requirements Back
Property transfers: who gets the interest?
Iol Property - South Africa
Buying a property is an involved and often daunting process, even if you’re an experienced buyer. Probably the last thing on your mind is the interest your money earns while it is held in trust until the transfer is finalised.
Interest certainly wasn’t top of mind for Gareth and Jenny Richards when they handed R2.6 million to self-employed conveyancer Lana Ebersöhn to pay for their home in Langebaan on the Cape West Coast last year.
But the following clause in the offer to purchase had not escaped the couple’s attention: “The purchase price shall be payable to the transferring attorney … to be held in a special interest-bearing trust account … until date of registration of transfer … with all interest to accrue to the purchaser, save for an administration and finance charge fee not exceeding R100.”
Although the interest rate wasn’t stipulated in the offer to purchase, the Richards expected to earn about R17 700 while their money was invested for the two months they assumed it would take for the transfer to be effected. (Their money had been earning R11 500 a month in a money market fund, which was paying interest of about 5.3 percent a year. In two months, they would have earned R23 000.) So you can imagine the Richards’ shock when they were offered a paltry R369 in interest – or 0.01 percent – for the two months that their money was invested by Ebersöhn.