Higher rate payments are affecting house purchases - and bond approvals

The City of Cape Town has announced that it has increased its charges for rates clearance certificates from 1st July.

If the application is done manually, the cost rises from R162 to R172. If it is done electronically, the cost rises from R54 to R57.

“We have to congratulate the Council on containing these costs in a conservative manner,” said Steward, “but it is also true that the higher rates and service costs are now having a noticeable effect on buyers’ choices – and on the size of the bond they can get.”

Especially among young people, said Steward, there has been a swing towards less expensive properties and smaller bonds, although once they have built up equity in their initial home, they can often afford far bigger deposits and bonds and then move up the ladder.

“Where three years ago a couple with a combined salary of R49 000 could easily qualify for a bond of R1,5 to R1,7 million today they will probably have to settle for one of R1,3 to R1,5 million. Because of the increased rates, refuse removal, electricity and other costs they will have far less disposable income from now on. As I have said recently, at APKF we do not regard this as altogether bad. The trend previously was to incur too much debt. Now buyers are content to start lower on the housing ladder and as a result can often live more comfortably within their incomes.”

Article by: www.realnet.co.za