Bond Choice forecasting lower price increases this year

Softening rentals in the top end of the market and the revitalisation of the Johannesburg Stock Exchange investment opportunities will definitely drag down earlier forecasts of property price growth this year, according to Bond Choice managing director Mark Beckett.

Other factors, such as the payment of transfer fees on off-plan units previously immune from taxation if sold before occupation and the general saturation in the luxury buy-to-let market will also wipe further anticipated gains off this year’s projected price growth.

Beckett, in a Durban interview this week, discussing the mortgage originator’s third anniversary, expressed serious misgivings that year-on-year upper end prices would top the five percent nominal increase this year while the lower and middle markets in his view would register rises of between 10 to 12 percent. Early year forecasts projected year-on-year price growth of 15 to 20 percent.

However, he was not pessimistic, nor negative, at the revised downward adjustments, interpreting them more as a market’s return to stability with more predictability.

Beckett reports an excellent third year in mortgage origination grants by Bond Choice consistently topping the R3 billion mark in monthly grants since April. Apart from organic growth based on strong market brand credibility and national footprint (with 33 offices nationwide) further contributions towards its market share gains of the fairly static home loan pie came from its association with Homenet, Multiple Listing Services (MLS) and Realnet and several smaller agencies. A recent origination agreement has also been struck with Gauteng-based Firzt Realty.

Concentration on the company developing its “right model”, “strong management”, substantial investments in infrastructure, and being held in heightened regard by the banks also contributed to Bond Choice’s fast-track emergence as one of the industry’s three largest mortgage originators based on monthly value of grants.

Bond Choice’s visionary e-Bond facility proved a cost saving boon in the past year during which it has flourished in user acceptance.

The sophisticated bond application processing system enables Bond Choice to capture, submit and track applications at the touch of a few buttons. Beckett says it already supports 300 users, including all the major banks and is growing at an average rate of three new users per week. More than 800 applications are being sent to the banks electronically every day via the system, which Beckett notes, has an average application capture time of less than 10 minutes.

But his feeling of well-being from Bond Choice’s mainstream success are muted by some general mortgage origination industry concerns, particularly weaknesses in the more basic structures, such as training and the rise in dubious practices.

He would like to see the adoption of certain structures used in the Canadian and Australian sister industries, but places more urgency in the control of the self-regulating industry body, the National Association of Mortgage Originators (NAMO), being moved from part-time management into the hands of permanent staffing with meaningful and substantial powers.

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