“There is definitely more confidence in the market now, and properties priced at under R1m are selling well in many areas,” says Clinton Krouse of the Chas Everitt International franchise covering East London West. “Buyers are mostly people in their 30s and early-40s with a 10 to 15-year work history and they are generally upgrading to their second or third homes, so have some equity with which to fund deposits and transfer costs.
“However, sales totals could probably be double what they are now were it not for the fact that many potential buyers still have black marks on their credit records as a result of the recession two years ago and are thus unlikely to obtain home loans.
“We pre-qualify all our buyers very carefully, so we don’t have too many loan applications actually being refused or sales falling through. But what we do see is a lot of people who are now in a financial position to buy actually being unable to do so because there are still question marks in their credit records.”
In many cases, he says, these are minor problems rather than serious judgments or a history of major debt problems. “In fact potential borrowers are often not even aware of them, but the trouble is that seemingly small infringements, like bills often paid past the actual ‘due dates’ or an instalment not paid because an account went missing in the mail send up red flags on the banks’ automated credit scoring systems just the same as big problems, so they need to be fixed before people apply for home loans.”
Meanwhile for first-time buyers, he says, the major difficulty is usually the requirement for a deposit of at least 10% and cash to cover transfer costs. “The banks are still highly reluctant to grant 100% bonds, so first-time buyers need to have quite a substantial sum saved before they can enter the market.
“Having said that though, there is good demand for townhouses around the R750 000 mark and for plot-and-plan homes such as those in a new development in Haven Hills, which are priced at between R450 000 and R550 000.
“In addition, many young people are staying on in rental accommodation while they save for deposits, and this is boosting rentals and the returns on investment properties.”