Bank foreclosures South Africa Homes signal
rate bite
October 26, 2007 By Mzwandile
Jacks found at http://www.busrep.co.za image
found at south.africa.house.for.sale
Johannesburg - The number of notices of sales in execution rose by two-thirds in
June compared with the same month last year, indicating that interest rates were
beginning to bite.
Bank foreclosures as a result of mortgage holders failing to make their bond
repayments had jumped to an average of just over 1 000 a month in June this year
from 600 last year, experts said yesterday.
John Loos, a property strategist at First National Bank Commercial, attributed
the current rise in sales in execution to the interest rate hikes that were
beginning to increase the risk associated with lending in residential property.
Although the increase in sales in execution during this period was below the
2001 and 2004 figures, he said, it did not augur well for the near future.
During 2001 and 2004, the figures were closer to 2 500 per month, he said.
Historically, only about 30 percent of notices for sales in execution resulted
in actual sales. Loos said this was because some mortgage holders managed to
sell their property independently or made other arrangements to finance their
mortgage payments.
"We could expect to see sales in executions rise to around 300 per month
over the next year," Loos said. "Based on this conservative estimate,
this would amount to R215 million worth of properties being repossessed each
month, with the bank and owner likely to recover, on average, only 62 percent of
the market value of these properties."
But Andrew Watt, the business development director at Lightstone Risk
Management, said the incidence of sales in execution across different market
segments differed widely.
Mortgage holders in the mid-market were "most feeling the effect of the
interest rate rises", Watt said.
“There’s so much inventory out there that the buyer can pick and choose,” said Susan Sirles Fidler, a Realtor at Re/Max 10, Oak Lawn. But she cautioned, “The stuff that’s almost free is almost free because it’s going to cost you an arm and a leg to put it back together. It’s not buyer beware as much as buyer be smart.”
