MORE BANK FUNDED MORTGAGE FINANCE NOW ESSENTIAL, SAYS INSTITUTE

Although this may not have been their intention, the banks’ inability and reluctance to lend mortgage finance, a situation exacerbated by the National Credit Act, has hit the lower end of the market harder than any other, says Ivan Neethling, the MD of StartProp and the Chairman of the Institute of Estate Agents Western Cape. Three years ago Neethling founded and set up the StartProp real estate agency and today it employs 40 people in four branches - Constantia, Belhar, Mitchell’s Plain and Khayelitsha.

Demand in all the low price areas for housing, says Neethling, is very strong and his company also has numerous potential sellers and buyers but at the moment 90% of bond applications in these areas are being turned down.

“The banks,” he said, “have got to realise that this is where the action now lies and it is essential to South Africa’s economy to get this sector moving.

“All our experience shows that there is very strong desire for homes in the Cape Flats and Metro South East in the R180,000 to R600 000 price range . However, the shortage of bonds is bringing the market to a standstill which even further interest rate cuts will not solve.

“In the Southern Suburbs, which are serviced by StartProp’s Constantia office, the focus is now on the R500,000 to R750,000 range. A year ago or more ago the main call was for homes priced from R750,000 to R1,5 million. A clear indication of how the market has been affected.”

“The slump in the property market has led to a reduction of 50% in our sales,” said Neethling. “The company is healthy, but some of our agents are suffering badly.”

Some relief, he adds, has been afforded by the state funding organisations such as the National Housing Finance Corp, but these take considerable time to assess applications and to give an answer.

The general public’s perception of the residential market now needs a boost, says Neethling, and “we simply have to move on from the current situation where far too many young couples are having to share their parents’ homes or are paying rents which they cannot afford. A change of policy by the banks, possibly with some government assistance, will provide the upliftment we now need.”

Article by: www.ieasa.co.za

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