Buyer sentiment positive
Giving one of the wide-ranging reviews of the current property scene, for which he has acquired something of a soothsayers reputation, Bill Rawson, Chairman of Rawson Properties, and a director of the Institute of Estate Agents, said that right now market sentiment regarding the buying of homes has seldom been more positive it is, he said, on much the same level as in 2007 and house prices are set to reach that level again within three or four months but the enormous difficulties surrounding bonds are still holding the market back.
There appears, said Rawson, to be a tendency at the banks to favour high return short term loans, e.g. on motorcars rather than house loans where they can seldom charge more than 10%. This, he said, is understandable in view of the fact that they have to maintain profits despite reduced lending but it is hitting the metropolitan area housing (especially lower priced housing) hard and curtailing price increases.
If the banks could find more innovative ways of easing up on the tough National Credit Act criteria we could very quickly be back into 2007 boom conditions, said Rawson. In the USA increased bank lending has already revived the housing market with the result that March sales figures were the most satisfactory for 22 months.
An indication of how strong the desire to own a home is can be gained from the fact that some buyers have been willing to negotiate an 80% bond with one bank and then take on two 10% loans with a different bank (one for the husband and one for the wife) at 25% interest rates, repayable over three years, to achieve a 100% loan.
This really is hocking oneself to the limit but it is far better than renting in perpetuity.
Buyers have also, he said, by and large accepted that rates, taxes and service costs will be far higher in future but even this, he said, has not dampened their desire for home ownership.
The Eurozone economic problems coupled in the UK to the huge costs payable by BP on their Mexico Gulf spill could lead to a no-growth scenario in many European countries and a limited growth scenario in the UK. This in turn, could, said Rawson, lead to a renewed interest in SA property as an alternative investment channel.
Although its impact has been over-emphasised, the World Cup event will, I think, lead a small percentage of visitors and TV viewers to investigate SA home buying.
In a final comment, Rawson said that anyone thinking of buying homes should take the preliminary step of seeing a bond originator like Rawson Finance to ascertain at what price level their application is likely to be successful.
Do not fall into the trap of believing that your chances are nil, as some have done. Find out what the banks will approve and, if necessary, pitch your expectations lower initially. The important thing is to get onto the homeowners ladder now while prices and interest rates are so affordable.
Article by: www.rawsonproperties.com