'People are panicking and desperate'
| 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.
Article by: Dominique Herman - www.iol.co.za