Property vice grip

 

October 03, 2008

Zululand OBSERVER

	Property vice grip Ronelle Ramsamy AN ever increasing number of local bondholders are under severe mortgage stress, resulting in approximately 60 homes in Richards and Empangeni coming under the auctioneer's hammer each month. Zululand estate agents have painted a grim picture of the current unfavourable conditions as interest rates continue to soar and houses for sale spend double the time on the market. And the job gets harder for agents as the number of potential home buyers have reportedly halved across the country. According to the Estate Agency Affairs Board, at least 18 000 estate agents have lost their jobs in the last year. And Franchisee of Pam Golding Properties in Richards Bay, Phil Hammill, says Zululand is no exception. 'Our circumstances are similar to that of the rest of the country. 'Statistics have revealed that the number of transactions have been halved and this places increasing pressure on estate agents to achieve success. 'Some agents and their agencies have slowed down dramatically, resulting in them leaving the industry and even the closure of a couple of agencies,' said Hammill.  Sifting Principal Owner of Remax-Marine in Richards Bay, Trudy van der Vlies, said this had resulted in many agents from smaller companies now moving to bigger estate agencies. 'This is a good sifting process for the market. It will be death row for agencies to take on an agent who does not have a good track record or not producing results. 'It is not only in our profession that business has slowed down. Across the markets, only 30% of businesses are showing confidence in our economy,' said Van der Vlies.  The National Credit Act (NCA) has also led to reduced approvals of home loans, thereby slashing the number of houses that agents are able to sell. Current statistics reveal the selling price has dropped by 5.5%, first time buyers have dropped by 10.7% and bonds applied for are 6.2% down. It appears the application volumes are 50% down and the bonds applied for at the banks have declined by 17% prior to the NCA. 'Overall, taking the four major banks into account, the average decline of bonds submitted and consequently declined, are 50.25%,' added Hammill. Overpricing With sellers reportedly overpricing their properties by up to 20%, local properties on average are spending over 100 days on the market. 'In Richards Bay, the average home is on the market for 153 days. We advise sellers about the correct selling price and find resistance. 'It is a difficult decision if you have purchased a home in the last 24 months and suddenly your bond has increased 32% plus, then on the sectional title units you have a further expense of rates and taxes,' added Van der Vlies. 'There are a large number of overpriced properties on the market. 'Unfortunately, some sellers have recently acquired their properties and need to dispose of them. These sellers are attempting to break even by adding their incurred costs onto the selling price. These sales are extremely difficult to convert. 'Purchasers view correctly priced properties and the buying public are more informed now than ever before,' said Hammill.