Beware, home buyer

By Staff Writer

From, the Times.co.za

January 15 2008


 
by Xolile Bhengu

Affordability will be an issue for prospective home buyers this year -
as it was towards the end of last year.


Absa estimates that home buyers will need to be able to pay R12 200 a
month to qualify for a bond that will buy them a home worth R964000 -
the bank's middle market segment average house price.


The Absa House Price Index for December 2007 released yesterday was
based on the total purchase price of properties of between 80m² to 400m²
 valued at R2.7-million or less in 2006.


The index said house prices were up by 14.5percent in nominal terms in
2007 compared with 15.2 percent in 2006 and 22.6percent in 2005.


It says the average house price increase dropped to 11.2percent from
November's year-on-year average of 12.5 percent, which was a 0.3percent
slower month-on-month growth.


Absa senior property analyst Jacques du Toit said the National Credit
Act and higher interest rates were squeezing people's budgets, adding
that the latest figures were the lowest price growth since 1999 which
were 9.3percent.


Du Toit said the trend was not isolated to new entrants in the property
market and he expects existing home owners to feel the pinch.


Furthermore, Du Toit said people who may foresee difficulties in
mortgage, vehicle, and any other debts to contact their financial
institutions.


"House prices have become more expensive. Banks are here to help,
it is not in their interest to repossess houses which they would rather
keep in their books, and would much rather ensure that customers continue
to pay for them. Speak to your bank and look at available alternatives.


"We are expecting this year to see an average growth as low as nine percent.
The NCA limits for responsible lending and high interest rates, have made
affordability a problem for all and the household debt ratio will increase.
This will place finances under threat and there is the possibility that some
people may lose their homes," Du Toit said.
 

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