Developers can look forward to stream of new buyers

Developers should be jumping for joy at the prospect of thousands of new homebuyers recently “liberated” into the market by the introduction of a State mortgage guarantee fund.
So says RealNet CEO Tjaart van der Walt, who notes: “The fund is specifically intended to give the banks more confidence about granting home loans to people earning R3500 and R9000 a month – and there are thousands of salary-earners such as policemen, teachers and nurses this bracket who have previously been shut out of the market.
“However, there is a currently a limited amount of stock available that would be affordable for such buyers and that should spur developers into action. At today’s interest rates, a person earning R3500 a month, for example, could probably only afford a bond of around R108 000, and assuming he paid a 10% deposit, that would mean he could possibly buy a property costing around R118 000.”
At the upper end of this scale, the person earning R9000 a month might be able to buy a home costing around R310 000, while a couple who pooled their mid-range salaries for a total of R15 000 a month, say, could probably buy a R500 000 home, depending on what other debts they have, such as car repayments or HP instalments.
“It is important to note,” says Van der Walt, “that the introduction of the mortgage guarantee fund does not override the provisions of the National Credit Act, and that banks are still going to apply the strict credit qualification criteria stipulated in this legislation, no matter what income bracket potential buyers fall into.
“Nevertheless, we believe there will shortly be much more action in the inner city and township markets, and that this will stimulate new development initiatives in other areas, which will help create jobs and, in turn, even more potential homebuyers.”
Meanwhile, he says, potential buyers in all income categories should be doing their utmost at this stage to save the biggest deposits possible – not so that they can afford more expensive homes but so that they can keep their bond repayments down and give themselves some budget leeway if interest rates should start to rise again.
“On the other hand, we also believe that government could be doing even more to encourage home ownership, for example introducing tax-relief on bond repayments as is available in the US.”
Issued by RealNet

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
    • 17 Apr 2018
      The recent interest rate cut has stoked the coals in the first-time buyer’s market. At least for the next two months until the next interest rate announcement, homeowners are guaranteed lower monthly instalments than in the previous quarter. But, is it wise to take out a 100% bond just to enter the property market while interest rates are low?
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us