There has been no change to this since it came down from 9.5% in November 2010 and many economists predict that it will stay this way for the remainder of this year. There are many economic factors that play a role in the decision to raise or drop the interest rate but it is no secret that household debt-to-income ratios hasn’t changed a lot during the last couple of years and has stayed very high meaning that most households are under pressure to service all their debt with the income they receive.

Currently, a R 800 000 bond over 20 years at prime (9%) will cost you R 7200 per month and R 6436 over 30 years. With many home owners under financial pressure to sell this IS a good time to buy property. If you take into account that the last interest rate hike was in June 2008 when it went up to 15.5% and before that, the highest point was in Sept 2002 when it went up to 17%. The repayments on the same house over 20 years would have been R 10 831 and R 11 735 respectively ….. eish!

We are currently seeing a huge upswing in activity in Krugersdorp and Roodepoort where there is a big demand for property around and below the R 1 300 000 mark. Houses that are priced right, sell!!

The last 4 to 5 years have not been kind to speculators looking to buy low and sell high unless you bought a bargain, way under market value. Most buyers from 2008 onwards would be lucky to make a profit if they were to sell now unless they have made significant changes to the property, increasing the value but not over capitalising for the area and type of property you have.

With the interest rate being so low, banks are offering prime-plus rates to successful applicants and having a deposit will help a lot to bring your rate down ……. Happy buying!!! www.realpro4u.co.za

Seeing that RealPro is now almost 3 years old I thought it would be a good thing to reflect on the last 35, almost 36 months of business.

RealPro started on 1 July 2007 when the interest rate hit 13% and was on the up to 15.5% in April 08. Needless to say, the property “boom” was over and everything was trying to come back to normal … which it still is.

The new NCA took effect on 1 June 2006 and had a big impact on the whole industry. NO MORE 108% bonds and now the financial institutions were very strict on affordability and values of properties. Luckily we have been in the business for some time and knew how to “roll with the punches”. To the day, we are amazed at buyers with unclean credit records and no cash for deposit or costs ….. the uninformed!?

Since RealPro wrote its fist offer on 7 July 2007 we haven’t looked back and we have assisted many buyers and sellers in the Krugersdorp and Roodepoort areas with the average registration taking up to 12.5 weeks from the time the offer was accepted. We normally give 21 to 30 days for bond application and approval so the actual registration process comes down to 9 + weeks from acceptance date. On cash transactions we have had deals from beginning to end taking only 4 weeks …. more of those would be nice.

Being a part of the MLS group of agencies we focus on taking well priced mandates that will then sell faster through the MLS system and therefore providing a better service to our Sellers, and in many cases the buyers as well. Although all our mandates don’t sell as quickly as we would like, there are many factors that we need to take into account when listing a property, two of the most important is Area & Price. From the transactions that we have done, the average time that the properties have been listed is just below the 12 week mark which explains why we prefer to take a MLS mandate for 4 to 6 months at a time.

Every home has a buyer, for the right price.

We have always concentrated on the marketing of our listings through property publications and websites but we are now also entering the new era of internet marketing through our blog, facebook page and twitter profile, any means out there to promote our busyness and our listings. Through MLS we now have 1439 properties available to sell or buy throughout Krugersdorp and Roodepoort.

RealPro is here to stay and although the industry is tight and we have to be at the top of our game, we see it as a challenge to keep up and grow with the current movements in the market.

“Any day is Really a good day to buy property!”

Find us on:

Web: www.realpro4u.co.za

Facebook: RealPro – Real Estate Professionals

Twitter: RealPro4u

So, we are fortunate enough to belong to the MLS group of agencies, advertising and selling the majority of properties in Krugersdorp. 

Having a look at the MLS (Property 24) system it is interesting to note the following:

I had a look at the houses with a minimum of 3 bedrooms, 2 bathrooms, 2 reception/living areas and a double garage. I found 17 properties fitting this description in areas such as Noordheuwel, Kenmare, Rangeview, Rant en Dal, Mindalore, Krugersdorp North and Pinehaven (these are free-hold clusters). 

The maximum price is R 2 700 000  (kdrp north) and the minimum R 699 000 (mindalore) with an average of +/- R 1 350 000. 

Some of these properties have a study and / or a domestic room and bathroom. In Noordheuwel you can now find a 3 bed, 2 bath, 2 garage house with 2 living areas and a study, a pool and domestic accommodation  on a 1250 sqm stand for R 1 350 000. 

Being in control of the stock is the goal of any agency and with less stock available in the market, sellers are becoming less negotiable on well priced homes. Buyers also need to know what they are looking for so that us as agents can narrow the search down as many properties sell over night leaving those “unsure” buyers to loose out on good properties.

In the article they mention a couple of factors such as declining interest rates and GDP growth etc. But what is really happening at ground level with buyers and sellers and how are we as agents coping with the changes in the industry?

In short:

Buyers came out of a period where they were making low offers and many of those offers were accepted by the sellers because they were desperate. If they didn’t accept it, the buyer will go to the next property on his list and make a similarly low offer until the seller gave in and excepted the offer …. stock was plentiful. We all know that it is difficult to get a bond these days and that the bond business has also taken a dive but people are STILL BUYING EVERY DAY … so this is not a credit act issue.

Then the interest rate came down to where it is at 10% now and many sellers can once again afford their properties so many of the stock got taken off the market leaving less options to buyers. Although some sellers came down with their prices to more market related values they also realised that with less stock they do not have to be so negotiable on their prices as long as the property is priced CORRECTLY! If the property is over priced compared to similar properties in the similar area … sorry for you.

Now we/I (personal opinion) find buyers who have and are busy missing the boat, trying to buy properties below market value (not referring to PIP’s and properties on Auction, which have also decreased). The sellers now, once again know that if their property is correctly priced it will sell at a reasonable price as there are not many similar to choose from etc etc.

Does this make sense at all …. to me, yes, our market is improving without properties getting more expensive, for now, but selling at reasonable prices in 4 to 6 weeks of being listed in the right area, at the right price and with the right exposure.

Looking forward to this rosy picture once again.

McS

The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers. Economists were unsure whether favourable inflation data would sway the MPC to lower rates. Statistics SA said on Wednesday consumer price inflation measured 5.7% year-on-year in February, below Sarb’s upper target range of 6%.

Prior to the MPC’s announcement, Investment Solutions economist Chris Hart said: “It’s looking quite good. The question now is: will the central bank, with the strength of the rand, be tempted to cut rates?” Despite the inflation data, Nedbank economist Carmen Altenkirch said her group expected interest rates to remain unchanged.

“We still expect that the MPC will keep rates steady,” Altenkirch said on Wednesday. “However, there is a significant chance that the Reserve Bank could take advantage of today’s [Wednesday's] dip in consumer inflation and the expected moderation over the coming months as well as the more flexible interpretation of their mandate to ease rates one last time.” – Fin24.com & I-Net Bridge

Clifton in the Western Cape ranks second with an average price of R12.503m and Chislehurston in Sandton third with a R12.167m average.

Bantry Bay is sixth on the list with an average price of R8.329m.

This is significantly below where several properties in the area are being priced. Pam Golding Estates (PGE) is currently marketing a super-luxury dwelling with 1 000m² living space at R85m.

The most expensive sectional title properties in the country are in Cape Town’s V&A Waterfront, where the average price is R7.267m. Constantia comes second with an average of R7.178m, followed by Clifton with an average of R6.699m.

The V&A Waterfront’s average might have been higher if the sale of the luxury penthouse in the One & Only hotel development had gone through.

According to rumour in the marketplace, the flat that had apparently been sold to a consortium for an astronomical R110m last year had in fact never been transferred.

According to statistics from the bond originators only 7% of applications for 100% bonds are granted at 100%. The banks / financial institutions are communicating to the public that such bonds are available so I guess they do but many factors influence the decision-making process: 

1. Application: Some banks are anti originators and won’t grant any application higher than 90% unless the applicant goes directly to the bank. Some banks are also more favourable towards their own clients than applicants banking with other banks.

2. Credit Profile: Each bank has its own grading criteria where applicants are scored according to their credit record with other institutions, banks, stores, accounts etc

3. Affordability: With the implementation of the new Credit Act, banks now do a full monthly expenses analysis where all expenses are taken into account such as car repayments, medical, fuel, insurance etc …. (money in – money out = money left/disposable income).

Once the bank is finished with the credit rating and affordability of the applicant they then either decline or issue an Approval In Principal (AIP) that is normally subject to a valuation of the property. This AIP may even be for 60, 70, 80, 90 or 100% of the purchase price, depending on what was applied for, and what the bank is prepared to bond!

If the property is in a Sectional Title Complex the bank sometimes does a “desktop” valuation as they have info on recently sold properties (similar) and if the purchase price is in line they then grant the bond as per the AIP in the form of a quotation to the applicant.

On most transactions a valuator is sent to the property to make sure that there is sufficient value in the property for the bond amount applied for. If the valuator does not find enough value the bond is then granted for a lessor amount although the AIP might have suggested 100%.

… to make a long story short, the purchaser has to be succesful according to the banks criteria and the property has to be of acceptable value and if these two factors are in line, the applicant may get a quotation of 100%. The interest rate at which the quotation is done might be below, on or above prime and is also a result of all that is mentioned above.

…. I hope this helps!

To find out how and how much the banks will be able to help you with, you can contact your bank directly. Although Banks do not do pre-approvals any more they can still give you a good idea …. if yo ask them they will also do a credit check to confirm your credit profile and depending on your income and expenses, work out what you may qualify for.

Most bond originating companies will also be able to give you a very close estimate.

One thing that you have to make sure off, and here your agent will need to assist you, is the issue of the bank valuation done on the property. In order for the bank to approve a bond they send out a valuator to confirm that the purchase price is in line with their valuation. If the bank do not find value in the property they will make you an offer lower than expected. Valuators look at recent sales/registrations in the area for similar properties. This is easier in a complex or estate.

If you are buying a R 900 000 Cluster in a complex/estate and applying for a 100% bond and the system,  SAPTG or Lightstone, shows that similar properties have registered for R 800 000 the bank will probably only grant you a R 800 000 bond but this could also be as a result of your affordability rating with the bank. 

Make the effort to know your own financial situation and your search for a property will be more focused and when you do find something that you like, chances of the deal being successful is greater.

1. Affordability:
Can I afford to buy another property whilst keeping this one fo investment?
What is your outstanding bond?
Will there be any monthly expenses that you wont be able to cover out of the rental income such as levies, rates etc?

2. Growth in the area:
What are the property prices doing in the area where I have my property … if I hold on for 1 year, what will I be able to get then?

What do you think, let us know??

The business cycle indicator consists of 13 sub-indicators, including manufacturing sales, wholesaling, new passenger vehicle sales, retailing and mining production. According to FNB’s property and mortgage market analysis department, the improvement in the economy is a sure portent of recovery in the property market.

“This bodes well for the residential mortgage market in the next few months, as it tends to show a very strong correlation to trends in new residential mortgage grants,” said the bank’s John Loos. Jacques du Toit, a property analyst at Absa, said the residential property market was expected to improve this year on the back of improved economic conditions, the lagged effect of lower interest rates and easier credit conditions. “Residential property transactions increased further in the final quarter of 2009 after bottoming in the second,” he said.

Du Toit said house prices are forecast to rise by between 6% and 7% in nominal terms this year.