HOUSE PRICES 'GRADUALLY IMPROVE'

2009/09/28 09:19:00 PM
Johannesburg -
Lightstone's repeat sales annual national house price inflation, based on Deeds Office transactions, continued on its upward trend, reaching -1.1% in May 2009, after bottoming at its lowest level of -3.1% in January 2009.
According to the latest Lightstone House price index released on Monday, extending the index forward to August 2009 using bank application data showed that annual house price inflation had reached 0.2%.
Should this trend be confirmed as the Deeds Office data starts to come in for the June to August period, it will show that South Africa has actually just moved into positive nominal house price appreciation for the first time since July 2008, said Lightstone.
According to the index, at a segment level, the Eastern Cape/Nelson Mandela Bay area was showing strength with inflation moving to between 4% and 5% year on year.
Tshwane appeared to be lagging the other metropolitans while on a value- based view, the luxury market was the worst performing.
The hardest segment to interpret appeared to be the Affordable segment, which despite showing good annual growth this month (+12.1%) had been very volatile over the last few months.
"We will continue to monitor its performance closely," said Lightstone's director, Andrew Watt.
- I-Net Bridge

BUY A HOUSE WHILE BARGAINS LAST

2009/09/23 08:04:00 PM
Svetlana Doneva
Johannesburg - South Africans looking for property bargains in the residential market should strike while the iron is hot, according to FNB Home Loans property strategist John Loos.
"It's a relatively good time to buy. Although things are turning for the better, there is a high level of financial stress selling and that is where the opportunistic buyer can cash in," said Loos, speaking to Chris Gibbons on Fin24.com's podcast AM Stock Take on Wednesday.
Loos added that another reason why South Africans may want to have a look at the residential market is because the economy is at the bottom of the interest rate cycle - or very close to it.
The South African Reserve Bank's Monetary Policy Committee (MPC) left the key repo rate unchanged at 7% at their September meeting. The prime lending and mortgage rates are also steady at 10.5%.
The market consensus is that there will be no more major rate cuts this year. The MPC has cut rates by a collective 500 basis points since December 2008.
The local residential market is currently in a deflationary mode. House prices fell 3.4% in August 2009, compared to the same month last year and a 3.7% year-on-year drop in July, according to Absa Home Loans calculations.
However, property economists see house price inflation returning next year.
"Oversupply will be mopped up in the second half of the year and then house price inflation can resume in 2010 with moderate single digit inflation," said Loos, adding that there will be "no fireworks in the recovery".
Jacques du Toit, senior property analyst at Absa Home Loans, saw nominal house price growth of just under 3% over the course of next year.
Meanwhile Dr Andrew Golding, CEO of the Pam Golding Property group, said that lending institutions will need to relax their lending criteria in order to breathe some life into the market place.
"Unquestionably, the reduced availability to finance is the single biggest factor holding back the housing market now," said Golding.
- Fin24.com

ABSA FOLOWS STANDARD'S LEAD

2009/09/08 09:05:00 AM
Elma Kloppers
Johannesburg - Competition is alive in the banking sector and consumers are reaping the benefits, reckon industry players.
This is particularly so in the home-loan market, where Absa has followed Standard Bank by also relaxing its lending criteria for home loans.
"This step is probably because banks have recently been under tremendous pressure to resuscitate the housing market," comments Stuart Grobler, a senior general manager at the Banking Association of South Africa (Basa).
He says Absa's response is one of the benefits of competition. Banks have for some time been sharply criticised because their deposit requirements constitute a principal reason for the pressure on the housing market in the past year, despite the series of interest-rate cuts since December 2008.
But Absa is being less generous than Standard Bank, which last week made 100% mortgages available for new home loans of up to R1.5m.
Absa still requires a 5% deposit for loans of up to R1.5m for Absa clients using the bank's internal channels, and a 10% deposit for those using external channels, such as mortgage originators. Deposits of 15% were previously required.
But Absa clients wishing to buy repossessed houses from the bank will qualify for 100% loans.
Erwin Rode, a property valuer and economist at Rode & Associates, says this makes sense because these houses can be bought at a healthy discount, possibly as much as one-third below market value.
Buyers of cheap houses will be the biggest beneficiaries of Absa's new lending criteria. The bank is making 110% loans available for prospective buyers with a monthly household income of up to R11 000.
Luthando Vutula, managing executive of Absa Home Loans, says this applies to mortgages of up to R250 000.
But, despite the lower interest rates, he points out that the economy remains under pressure and Absa still encourages deposits. "It's important to have equity in a home loan, especially when house prices are falling."
Commentators agree that this is good news for the house market. Betterbond marketing director Dr Deon Lessing says it is becoming easier to buy a house since a smaller deposit is now required.
He expects this, together with the lower interest rates, to stimulate the housing market.
Adrian Goslett, deputy regional director of Re/Max, says this is creating a fresh platform for competition between lending institutions, and will benefit both consumer and the housing market.
Rode says prospective buyers will still have to meet the criteria of the National Credit Act. "That way, banks will be able to manage their risk."

STANDARD BANK OPENS THE CREDIT GATES

01 September 2009

They're back! 104% home loans for R1m homes - and more.

Announcement
Johannesburg 1 September 2009 - Standard Bank has recently increased its risk acceptance rate in its Home Loan, and Credit Card divisions. The changes made to Standard Bank's risk appetite have been specifically designed to benefit first-time entrants into the housing and general credit markets.
Peter Schlebusch, Standard Bank CEO Personal and Business Banking South Africa says: "It is important that we support and provide access to finance to the lower end of the economic spectrum. People in this sector have been hardest hit by higher inflation, job losses and the general slowdown in the economy. Standard Bank is committed to providing access to finance and financial services to the low income market, while continuing to focus on prudent risk, capital and liquidity management."
The following adjustments have been made:
Jump Start bonds (first-time home owners) up to R1m home loans and who are using this as their primary residence are now able to qualify for a cost-inclusive 104% LTV (loan-to-value) loan.
Affordable housing: Standard Bank is now allowing LTVs of 100% (up from 90-95%).
Standard Bank has upwardly revised its LTVs on new home loans. Customers using internal Standard Bank channels with home loans of under R1.5m can qualify for LTVs of 100% (up from 90-95%). Houses of R1.5m-R2.5m will however still require a 10% deposit, and >R2.5m home loans will still require a 20% deposit.
Standard Bank has started accepting low-risk non-cheque Standard Bank customers, and low-risk non Standard Bank customers for home loans.
In Credit Card, Standard Bank is increasing its risk appetite by raising the "acceptable" bad debt ratio by 3% on new business written in a select entry-level segment of the portfolio.

Sim Tshabalala, Standard Bank South Africa CEO says: "We believe that an economic recovery will be slow but we see medium term improvement among households, as affordability improves on the back of lower interest rates. We have taken proactive steps to capitalise on this improvement."
Standard Bank has accepted the tender proposals for origination business from BetterBond, Bond Choice and Multinet, all three of which commenced submitting Home Loan applications from 24 August 2009. Standard Bank believes the new rates negotiated with mortgage originators will allow for a sustainable long term business model.

PROPERTY WON'T GET MUCH CHEAPER

Sapa
01 September 2009

More signs of a house price recovery - bank stats

House price growth was likely to improve towards the end of the year as the effect of interest rate cuts impacted on the economy and the property market, the Standard Bank said on Tuesday.
It was releasing its latest residential property gauge.
The bank said growth in its median house price index decreased by 5.2 percent year-on-year in August, averaging 3.9 percent year-on-year in the first eight months of 2009.
"Important drivers of overall growth in the economy, such as the level of household income and debt, as well as the medium-term economic and financial outlook, are such that a quick turnaround in the housing market is unlikely," Standard Bank said.
"The best that we can hope for is for price declines to stabilise towards the end of the year as the recent interest rate cuts work their way through the economy and overall consumer and business sentiment improves."
It said that the potent mix of industry-wide loan-to-value restrictions, negative income growth and concerns about job security would weigh on the property market.
Furthermore, in the short-term, any easing in credit-granting criteria would be mild, as upside risks regarding uncertainty in job security and income growth continued.
Standard Bank said the cumulative interest rate cuts that commenced in December 2008 would still have to filter fully through the economy.
"The full impact of interest rate cuts on economic growth could take as long as 12 to 18 months, implying that it may be too early to expect substantial economic growth this year," Standard Bank said.
In the short term, the economic outlook was expected to remain lacklustre.
However, relatively positive developments on the inflation front, the global economy and the full impact of lower interest rates would support the property market in time to come, the bank said.
It was anticipated that house price growth would be negative over the short to medium term, but was likely to improve towards the end of the year.