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Property prices were adversely affected in South Africa after the implementation of the National Credit Act, and while S.A. has been rather cushioned from the effects of the global recession, it has been enough to lower house prices to levels that are attractive to a new group of potential investors. The top-end segment has the most significantly affected in terms of volumes.
The emotional price - which is purely the price buyers wish to secure homes — has in the current market conditions become the reality, although this has been true for a while now. The property market continues to fall to levels last experienced 3 years ago and at rates not experienced since the 1980s with regard to South Africa.
Fortunately for those folk who have sought professional advice on affordability and procured their housing loan deposit plus the capital for administration — the time for purchasing property has never been better. People such as these are genuine home owner seekers. Affordability was a factor largely cast to the winds in the years running up to the implementation of the NCA, or National Credit Act.
Even though house prices have fallen by about a quarter, or 25%, it is far better than the 50% of the US and Europe. Also it is coming off a wave of sustained growth of 3 decades.
Mortgage origination is a relatively young business locally and is typically the process of finding bonds for home owners that suit their specific needs. The key to success here lies in offering the client a choice of banks and thus providing a hassle- free service without incurring additional costs.
Typically you will find that each bank has its own lending criteria and product range to different niche markets — ranging from the first- time buyers to the up market private bank client with the multi-million-rand property.
Other evidence is that sellers have started accepting that house prices have fallen, and middle income buyers are starting to enter the market again.
Second hand properties have become increasingly popular while the development or new property market is on hold.
The bad news is that the prognosis for credit granting at this point in time is not great. We are in the wake of a recession which was fast in arriving, but repairing global economies will be slow while banks try to build strong debtor books again.
That being said, the South African bond origination market has rapidly reached a maturity closely on par with other first world countries such as Canada and New Zealand and will surely play a sound role in the future of home ownership and property development.
Consumers are also demanding choice, and banks are seeking a means to obtain quality bond applications. Mortgage origination provides this service to both.