| While real estate agencies have reported a marked increase
in calls by residential property owners looking to sell their investment
or holiday homes, auction houses in the Western Cape say the number of
stressed second-home sales is as much as 300 percent higher than this
time last year.
The chief executive of the Alliance Group, Rael Levitt, said there
had been a 300 percent increase in inquiries from those in "distress
scenarios" this month.
This was in comparison to January last year.
These were not the properties of "Mr and Mrs Homeowner".
While Andrew James, chief executive of the smaller auction house, Michael
James Organisation, said it was safe to say that his company had also
experienced a 300 percent increase in inquiries in terms of the size
of their business.
"We've been fielding 10 calls a day for the auction of second homes,
in every type of home from the R500 000 Southfield home to the one going
for R7-million to R8-million," said James.
"It's actually frightening." He compared the frenzy to what
occurred before the interest rates starting coming down more than four
years ago.
"Now people are panicking and desperate - it's crazy."
ClareMart Auction Group chief executive Jonathan Smiedt said ClareMart
usually performed up to 40 residential property auctions a month.
In February, there were 74 lined up, double the number during February
last year.
Most of the properties were "stressed sales"; those sales
of investors and speculators who could no longer afford the bond repayments
on sectional title units and resort properties that they had purchased
as second properties.
"We're stressed out here. All of us are working overtime,"
he said.
Levitt said the property market had been hit with a quadruple whammy.
However, it would take up to two years after the seven interest rate
rises of the last year or so for the knock-on effect to be felt in terms
of foreclosures and insolvencies.
"One mustn't negate the effect of the electricity crisis in South
Africa - especially in Johannesburg," he added.
There was also the National Credit Act to contend with and the international
market jitters as a result of the US sub-prime crisis.
There was a "slew of bad news coming out of the UK and Germany
- all over the show". South Africa was also coming out of the biggest
property boom it had seen in three decades.
Smiedt said the insolvencies/liquidations market had not been affected
yet. He reckoned that would start to "come though" in the
second part of this year.
|
Newsletter:
19 March to 26 March 2010 - ST Helena Bay, West Coast, Western Province, South Africa
