Do you really need the whole home loan?

One of the great things about buying property is that it is relatively easy to gear the purchase – or use the bank’s money to finance most of the purchase price – and then keep the profit made on the entire asset when you decide to sell.

And the higher the gearing ratio – that is, the smaller the deposit and the bigger the loan – the greater the opportunity for gain.

However, higher gearing does also mean higher risk. Property prices fluctuate, in the short term, although historically the trend has always been upwards. If you buy a property with a deposit of only 5% and prices then fall 5%, you will lose your whole “investment” unless you can wait for prices to rise again before you sell.

Borrowers also need to consider that a lower gearing ratio – a bigger deposit – will generally mean a better chance of being granted a home loan at the most favourable interest rate, and of paying the loan off faster, so that the property owner will show a bigger “profit” when the time comes to sell.

Banks will determine how much you may borrow, based on your credit record and current income, and it is a good idea to be pre-qualified for a home loan, so you know what your limit is before you go househunting.

But as a prospective buyer, you also need to determine what size loan you would feel comfortable about repaying. Just because a bank is prepared to grant you a bigger-than-expected loan does not mean that you should immediately opt for a more expensive property or a higher gearing ratio.

Determining what size loan is right for you remains a personal decision and should take into account your overall investment strategy, as well as the property in question.

The buyer of a newly-built property for example, may need less cash to cover transfer costs or improvements and be able to put down a bigger deposit, while the buyer of an older home may decide to take a bigger loan and keep some cash in hand to cover the costs of repairs and renovation.

In general, it is good advice to put down the biggest deposit possible and keep the amount borrowed to the lowest level, but before you decide, you really should consult a mortgage originator such as BetterBond, so that a professional loan consultant can identify and present you with all your loan options.

Ten tips for buying a bank-repossessed property

This week’s article was contributed by John L. Bradfield, and originally appeared on his blog “This ‘n That”. John is a Real Estate professional with 20 years’ experience in this industry. He is based in Hermanus, the whale-watching capital of the world.

One of the advantages for buyers of property in the current economic climate in South Africa is the increased availability of bank-repossessed homes on the market.

When borrowers default on the payment terms of the mortgage loan, eventually this will lead to legal action by attorneys instructed by the mortgage holder. A judgement is obtained in the High Court, and the property is then attached and sold by the Sheriff of the High Court at a sale in execution. If the auction fails to achieve the bank’s reserve price, then the property will be bought by the bank and placed on the market again. This is called a Property in Possession (PIP).

Another source of PIPs comes from home owners that are declared insolvent. Here a trustee will be appointed, who in turn will appoint estate agents to market the property. If it does not sell, a public auction will be arranged through a qualified auctioneer. Once again, if the property does not fetch a suitable price, the bank may buy it in and the property will be placed on the market by the bank.

On average, bank-repossessed properties sell at a huge discount, and since banks are keen to find buyers, they are often ready to relax their lending criteria, making home loans in these cases a little more accessible. This may include reduced, or even no home loan registration costs.

Another advantage is that the transfer process is often much quicker, leaving more time to do any renovations before actually moving in. Also, property rates and taxes (including arrear amounts) will be paid by the seller (the bank) up until date of registration.

Here are the top 10 tips for buying a bank-repossessed property:

1. Make sure you have a plan
What will you do with your property? Will it be a buy-to-rent purchase, will it be a holiday home, or will you live in it?

2. Get pre-approval if you intend to buy with a mortgage bond
Chances are, if you like the property, so will many other potential purchasers. You do not want to lose out to another buyer while you are waiting for your home loan approval. Have your pre-approval in hand when you make that offer to the bank. It will speed up the process, and increase your chances of having your offer accepted.

3. Compare the price of similar sold homes to the price of the bank repo you intend to buy
You need to compare “apples to apples” to make sure that your intended purchase is good value. An experienced agent can help you with this by preparing a Comparative Market Analysis (CMA). By accessing Deeds Office records for the selling prices of properties recently sold, it’s possible to get an accurate assessment of what your target property’s selling price should be.

4. Know the hidden costs of the property
Bank-repossessed properties are sold voetstoots (as is), and the bank will not undertake any repairs. Often the property has been stripped of fixtures and fittings. Typically the property has been through an extended period of neglect and essential repairs and maintenance have not been taken care of by the previous owners.

Electrical, plumbing and gas installation compliance certificates must be obtained by the purchaser as part of the transfer process. If the property is in a mess, the costs of bringing these areas up to scratch could be significant.

5. Get a home inspection
A thorough inspection for defects carried out by professionals can go a long way to identify all defects and potential defects in the property. Consider investing in a professional home inspection before you make a buying decision.

6. Investigate if the property is occupied
It can happen that there are occupants living on the property at the time of sale. This could be the previous owners that have not yet moved, tenants that are still there, or it may be an illegal occupation. Whatever the case, this automatically becomes the buyer’s problem at the time of sale, and the costs of an eviction and relocation may become the purchaser’s liability.

7. Investigate restrictions on the title deed
Any restriction or servitude on the title deed may or may not be mentioned in the information provided, and it is therefore advisable to look at the title deed before making a decision. If the property is owned by the bank, they will be in possession of the title deed.

8. Consider the location of the property
This may seem obvious, but most people in financial trouble will first have tried to sell the property themselves before the bank foreclosed on them. If the home is badly situated, this could be the reason the property did not sell in time to save the situation.

9. Make a good offer
Once you have decided that the property you are considering is a good buy, know that other people will also come to the same conclusion. There is no point in making a low offer. Ideally you should make an offer that is within 90 – 95% of the bank’s asking price. You will just lose out if you keep making offers that are too low.

10. What to do if your offer is turned down
You could up your offer. However, you might consider it worthwhile to wait 30 days and re-submit your offer. Properties in possession are expensive to maintain. There may be security guards on the premises, and the garden must be maintained, for example. The bank could become more negotiable as time passes.

Visit the BetterBond website for more information about pre-approval and other real estate matters.

Seven reasons why private sellers should not be selling their homes

This week’s article was contributed by John L. Bradfield, and originally appeared on his blog “This ‘n That”. John is a Real Estate professional with 20 years’ experience in this industry. He is based in Hermanus, the whale-watching capital of the world.

At first glance, selling your home privately can seem like an attractive proposition. You’ll save the agents commission, right?

In fact many private sellers are home owners in financial trouble, and are hoping to avoid paying the agent’s fee in order to clear an outstanding mortgage loan without “paying in”.

The reality is that many of these homes end up as “distressed sales”, and are auctioned by the bank at greatly reduced prices.

Sadly, in many of these cases the result can mean even greater financial hardship for the unlucky owners. In some cases the shortfall translates into a long-standing debt that will represent a financial burden for many years to come.

Many of these unfortunate experiences come about because private sellers are misinformed about the role of estate agents and about what an experienced realtor can bring to the process. Without access to relevant data, private sellers sometimes begin by overpricing their homes — based on other overpriced homes in the same area. There are a few pitfalls to avoid. Here are seven of the most important reasons why private sellers should not sell their homes:

7. Lack of time

Selling a house involves a great deal of time. Someone must be on hand to handle all enquiries any day of the week, including weekends, to show the house, work with prospective buyers, and deal with paperwork. You may be working full-time or you could be relocating. You could find it difficult to devote the necessary time to selling your home. This can result in lost opportunities that may be scarce in the current market. A full-time estate agent can devote the necessary time to showing your home, dealing with prospective buyers, and taking care of the paperwork.

6. Lack of objectivity

From a purchaser’s perspective, an estate agent brings an air of objectivity to the sale. One of the reasons that private sellers may find it difficult to deal with potential buyers, is a lack of the required detachment. The private seller’s natural emotional involvement with the home can leave potential purchasers feeling awkward and inhibited while viewing. An estate agent can help to assess potential offers from an objective and expert perspective, offering professional and researched opinions to help overcome the purchaser’s objections in a reassuring way.

5. Lack of security

Private sellers are faced with the problem of giving out their personal information to strangers. As a private seller you will have no screen between you and a potential buyer or a potential scam artist who may be trying to trick you into gaining occupation of your home. Even worse, you may be faced with a criminal inside your home who could try to steal things while looking around, or perhaps “case” the property and security systems for a much bigger crime at a later date. Estate agents deal with potential buyers on an ongoing basis, can preserve your privacy, and can usually tell if something doesn’t feel right, thereby preventing potential problems of this kind.

4. Working with unqualified buyers

In the current market less than 50% of potential buyers will qualify for a home loan. It’s sometimes difficult for private sellers to ask the probing questions that are required to thoroughly check out the financial capabilities of potential buyers. Sometimes a buyer has not properly investigated how much cash is required upfront for the deposit and transfer fees, leading to a failed transaction. A professional estate agent is trained to do a proper assessment that can save time and expense down the line.

3. Paperwork and legalities

Apart from the need to achieve familiarity with sale agreements and other legal documents, private sellers are faced with liability issues when dealing with buyers one-on-one. Laws dealing with property sales have increased and become more complicated in recent times. The new Consumer Protection Act is the most recent example of these.

A professional realtor is trained to deal with these legalities and provides the seller with the security of knowing that these issues will be properly taken care of. When drawing up the Deed of Sale, certain details can be contentious. An experienced estate agent can recognise the pitfalls and traps in any given situation, and do the drafting of special clauses in such a way that both parties are protected from nasty surprises or disappointments later on.

2. Lack of exposure

Private sellers must carry the costs of advertising and marketing, whether they sell their homes or not. Most private sellers don’t have the knowledge or resources to create enough awareness, and for these reasons they will not have the ability to select the most effective advertising methods, and will not have access to a wide enough pool of potential buyers. However, a professional estate agent has access to an existing database of buyers, and to national and international referral and marketing channels.

1. Inexperience in negotiation

Possibly the most important aspect of selling a home involves the concept of price negotiation when an offer is received. The agent’s fee is percentage based, so the bigger the sale, the higher the fee. Typically, buyers approaching a private sale feel that the private seller’s saving in commission should accrue to them, and not to the private seller. A good estate agent is a trained negotiator and is skilled in the art of maximising the selling price of your home. For these reasons an estate agent will often achieve a higher net value than a private seller at the end of the day.

Visit the BetterBond website for more information about bonds and estate agents.

Advice from best-selling author Seth Godin: how to think about buying a house

You don’t see a lot of ads trying to sell you on spending too much money on a house. It’s more subtle than that. The marketing is all around us, and has been for years. The enormous social pressure and the expectations that come with it lead to misunderstandings and confusion. Here’s my advice to someone in the market:

1. In an era where house prices rise reliably (which was 1963 to 2007), it was almost impossible to overpay for a house. It was an efficient market, and rising prices cover many mistakes. Investing in houses in the USA was a no-brainer. More leverage and more at stake just paid off more in the end. This consistent, multi-generational rise taught us more than an ad every could: buy a lot of house  with as little downpayment as you could.
2. A house is not just an investment, it’s a place to live. This is the only significant financial investment that has two functions. Things like cars and boats always go down in value, so most of the time, if you’re investing, you’re doing it in something that you don’t have to fix, water, fuel or live in. You shouldn’t fall in love with a bond or a stock or a piece of gold, because if you do, you won’t be a smart investor. The problem (as people who sell and fix and build houses understand) is that you just might fall in love with a house. What a dumb reason to make the largest financial investment of your life.
3. The psychology of down markets is irrational. Rising house prices might be efficient (many bidders for a single item lead to higher prices), but when there aren’t so many bidders, irrational sellers (see #2) don’t lower their prices accordingly. So, inventories get longer and it’s easy for the prospective buyer to think that a certain price is the ‘right’ price because so many people are offering houses at that price. Just because someone offers a price, though, doesn’t mean it’s fair in a given market.
4. Along the same lines, anchoring has a huge impact on housing prices. If someone offers a house for $800 000 and you think it’s worth half that, you don’t offer half that. No, of course not. The price is a mental and emotional anchor, and you’re likely to offer far more.
5. The social power of a house is huge. When you buy a big house or an expensive house, you are making a statement to your in-laws, your family, your neighbours and yourself. Nothing wrong with that, but the question you must ask yourself is, “how big a statement can I afford?” How much are you willing to spend on personal marketing and temporary self-esteem?
6. Debt is an evil plot to keep you poor. If buying a bigger house (or even a house with a living room or a garage) is going to keep you in credit card debt, you’ve made a huge financial error, one that could cost you millions.
7. By the time you buy a house, you probably have a family. Which means that this is a joint decision, a group decision, a decision made under stress by at least two people, probably people that don’t have a lot of practice talking rationally about significant financial decisions that also have emotional and social underpinnings. Ooph. You’ve been warned. Perhaps you could add some artificial rigor to the conversation so that it doesn’t become a referendum on your marriage or careers and is instead about the house.
8. If you have a steady job, matching your mortgage to your income isn’t dumb. But if you are a freelancer, an entrepreneur or a big thinker, a mortgage can wipe you out. That’s because the pressure to make your monthly nut is so big you won’t take the risks and do the important work you need to do to actually get ahead. When you have a choice between creating a sure-thing average piece of work or a riskier breakthrough, the mortgage might be just enough to persuade you to hold back.
9. Real estate brokers, by law, work for the seller (unless otherwise noted). And yet buyers often try to please the broker. You’ll never see her again, don’t worry about it. [Let me be really clear about what I wrote here, just in case you'd like to misinterpret it: When a prospect sees an ad or goes to an open house, she is about to interact with a broker. That broker, in almost every case, is hired by the seller and has a fiduciary responsibility to the seller to get the very best price for the house. There are exceptions, like buyer's brokers, but those brokers, as I said, note that they are representing the buyer--how can you represent someone without telling them? Many brokers like to pretend to themselves that they are representing both sides, and while that's a nice concept, that's not the law.]
10. You’re probably not going to be able to flip your house in nine months for a big profit. Maybe not even nine years. So revisit #2 and imagine that there is no financial investment, just a house you love. And spend accordingly.

I’m optimistic about the power of a house to change your finances, to provide a foundation for a family and our communities. I’m just not sure you should buy more house than you can afford merely because houses have such good marketing.

SETH GODIN has written fourteen books that have been translated into more than thirty languages. Every one has been a bestseller. He writes about the post-industrial revolution, the way ideas spread, marketing, quitting, leadership and most of all, changing everything.

‘Deposit drag’ keeps market on a choke-chain

Everyone in the property market knows that the current deposit requirements for home loan approval are among the biggest obstacles to increased home sales and faster property price growth.

But just what the extent of the deposit obstacles might be has not been quantified until now, with the release of new statistics by BetterBond, SA’s leading mortgage originator, which show how the home buying plans of many consumers are being delayed by many months due to rising deposit requirements.

The BetterBond figures, which represent a quarter of all residential mortgage bonds being registered in the Deeds Officeand include applications to, and bond grants from, all the major lending banks in SA, show that in the 12 months to end-February, homebuyers and owners in SA took up more than 80 000 new home loans, with more than 96% of those loans going towards the purchase of an existing home or the construction of a new one.

In addition, the average purchase price of the properties on which these bonds were granted rose 8,5% year-on-year to R867 000.

“But although these are healthy signs that the residential market is in recovery,” says BetterBond CEO Rudi Botha, “we believe it would be gaining momentum much faster if it were not for the fact that the size of the deposits that prospective homeowners are expected to pay is also increasing – and not in proportion to the rate of home price increases.”

For example, he says, the average value of the bonds granted in February, at some R745 000, was only 6,7% up on the average value in February 2012.“In other words, the bond value gain is not keeping up with the home price gain – and the discrepancy is explained by the increase in the average deposit required, which has gone from 16,1% of purchase price a year ago to 16,7%. This has boosted the actual cash requirement for the average deposit from about R129 000to around R145 000.”

Meanwhile, the average household income of bond applicants has actually remained static over the past year at around R46 000, so for those who do not have equity in an existing property and need to save a deposit, the time that would be needed to do so has gone from 28 months to 32 months (assuming they are able to save 10% of their income per month).

And this four-month delay appears to be the minimum extent of the ‘drag’ that current deposit requirements are having on the market.BetterBond statistics show that the average purchase price for first-time buyers has risen more than 16% to R677 922 in the past year, while the average deposit requirement has gone from 8,6% of purchase price to 10,1%.

During the same period, the average income of first-time buyers applying for home loans has only risen about 5,5%, with the result that the estimated time it would take the average first-time buyer to save up a deposit, at the rate of 10% of earnings per month, has gone from about 17 months to 23 months.

“It will of course take much longer for those who cannot save as much, or those who plan to buy higher priced properties,” notes Botha. “Our stats show that those seeking to buying a first home priced at between R1m and R1,5m would now need 54 months to save a deposit – as opposed to 44 months a year ago – a very long wait during which they are very likely to lose out on the interest rate and home price advantages of the current market.”

International news: US market on the mend

When the housing bubble burst in the US, it plunged the economy of the country – and the rest of the world – into a recession from which it has yet to recover.

But now, just five years later, many economists believe that the housing market will be one of the primary drivers of growth in the US economy over the next couple of years.

Moody’s Analytics, for example, is forecasting somewhere between one million and two million housing “starts” this year, which it estimates will create more than one million new jobs.

“There’s a lot of pent-up demand for housing, and very little supply,” says Celia Chen, housing economist for Moody’s Analytics. “As demand continues to improve, home builders will have nothing to sell. They’ll have to build. And growth in building will mean adding not just construction jobs, but also manufacturing jobs to make the appliances and furniture needed in the new homes, which in turn drives up overall consumption.”

Meanwhile Joseph LaVorgna, chief US economist of Deutsche Bank, explains that one of the most significant indirect effects from a housing recovery is the “wealth effect” on consumers due to an increase in home prices. “Better home values can affect both consumer psychology on spending as well as their actual finances. Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets.”

But is demand really rising enough to prompt the expected building starts, or drive up prices?

Well, according to the National Association of Realtors (NAR), the inventory of pre-owned homes for sale was at a seven-year low of 1,74-million in January. This represented a 4,2-month supply, down from a 4,4-month supply in December, and NAR chief economist Lawrence Yun says the reasons for the drop include slow and steady job gains, record-low mortgage rates and higher consumer confidence.

“The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market again early last year as their financial ability and confidence steadily grew, along with home prices, and lower inventory levels now are encouraging multiple bids from buyers.”

In addition, many of the distressed homes that were adding to inventory have been absorbed in the past year by individual investors, private equity groups and hedge funds aiming to renovate them and rent them out – and hurrying to buy before prices really start to rise again.

Indeed, RealtyTrac, an online foreclosure marketplace, reported recently that distressed properties, which include foreclosures and short sales, accounted for 43% of all US pre-owned home sales last year. What is more, the prices of such sales were 2% up, on average, compared with 2011.

And speaking of prices, the latest Standard&Poor/ Case-Schiller Home Price Index shows a 6,8% year-on-year gain in December, while the latest Zillow market report indicates a national average home price increase of 0,7% in January – the 15th consecutive month of gain – and predicts a further 3,3% increase over the course of 2013.

Zillow puts the current national average home price in the US at $158 100. The boom-time peak, in April 2007, was $193 900.

Tell your sellers: focus on the first impression

Homeowners often ask their estate agents what pre-sale upgrades are likely to give them the best return on their investment, in the form of a higher sale price – and the answer, at the moment, is not a kitchen or bathroom makeover, but exterior updates that improve curb appeal.

This is the finding of the 2012/2013 Cost vs Value Report published by Remodeling magazine, which annually surveys thousands of agents and valuers before listing the 35 most cost-effective home improvement projects for home sellers.

Some of these don’t apply in SA because of the different home construction methods used, but many do, including the one right at the top of the list this year, which is front door replacement – preferably with a steel door. This, it is estimated, will deliver an 85,6% return on expenditure when the home is sold.

Also among the 10 most cost-effective midrange projects were several other exterior upgrades that would be applicable here, including the addition of a wooden deck to the entertainment area (estimated 77,3% return); the replacement of an old garage door with a new one (75,7%); the replacement of steel window-frames with wooden ones (73,3%), the replacement of steel window-frames with vinyl ones (71,2%) and the addition of a composite (non-wood) deck (67,5%).

A minor kitchen remodel, done right, can also bring a good return of around 75%, but both major kitchen and bathroom remodels will give sellers a return on their investment of less than 60%.

In short, the best bet for sellers in the current market is really to focus on improving the “first impression” of their properties. In addition, the magazine notes, the use of durable, low-maintenance materials in the suggested replacement projects appeals to homebuyers who are increasingly looking to reduce both the operational and maintenance costs of their homes.”

Three years to save a deposit, unless…

Everyone knows by now that there are many advantages for homebuyers who pay a substantial deposit, but there are many who worry that by the time they can save enough, they will have missed the boat on low prices and low interest rates.

Could this be true? Just how long is it likely to take – assuming that they are serious about buying and, unlike most South Africans at this stage, also dedicated savers?

According to the latest BetterBond statistics, the average home price currently being paid by first-time buyers is R678 000, and the average deposit required of such buyers is some R68 000 – or just over 10%.

Meanwhile, the most recent Census figures show that the average earning of a two-income household in SA is now some R17 200 a month.

Thus those who are able to save 10% of their earnings a month (R1 720) would need more than three years (39,5 months) to save the 68 000 – by which time it is indeed likely that home prices will have moved up and that interest rates will have come off their current lows.

Wages and salaries are also likely to have gone up too, of course, but a large proportion of such increases are likely to be eaten up by rising food, power and transport costs as well as rent increases, leaving prospective buyers unable to raise their savings level by much.

The answer is for those who are keen to keen to get into the property market soon to lower their sights and buy a less expensive home to start with.

By doing this they will replace their monthly rent payment with a bond repayment on an asset that is increasing in value, and should also be able to divert what they were saving for a deposit into their home loan account, so that they quickly build up additional equity in their home. This can then be used to help them “trade-up” to a bigger and better home in a few years’ time.

Don’t let a mixed picture put you off

There’s “good news and bad news” for prospective homebuyers in this month’s statistics from BetterBond, which is SA’s biggest mortgage originator.

The good news is that the banks are granting more bonds – the figures show that in January, almost two-thirds (63%) of the home loan applications made through BetterBond were approved and taken up by the applicants, compared with only 47% a year ago.

And since the company’s statistics represent a quarter of all residential mortgage bonds being registered in the Deeds Office – and include applications to and bond grants from all the major lending banks in SA – this is a good indication of what is happening across the market.

“There was also more good news for buyers this month,” says BetterBond CEO Rudi Botha, “in the Reserve Bank’s decision to keep interest rates unchanged at their current 40-year lows. This extends the opportunity for homebuyers to qualify for bonds more easily as they are more likely to be able to afford the monthly repayments.”

The not-so-good news is that the number of 100% home loans being granted continues to fall, as banks insist that buyers invest some of their own money in their homes in the form of deposits. The BetterBond statistics show that in January, only 20% of approved bonds were for 100% of the property purchase price, compared with 21% a month previously, and 22% a year ago.

“The average deposit required in January,” notes Botha, “was 18,7% of the purchase price, which was more than the 18,5% required in December but better than the 19,6% required a year ago.

“However, this overall average hides the fact that much lower deposits are required in the lower home price categories – which is more good news, especially for first-time buyers and those downscaling to homes in the R250 000 to R500 000 bracket, where the average deposit requirement at the moment is just 10%.”

This should make it much easier for such buyers to save up the necessary deposit, he says, “and it’s very important that they do so as soon as possible, not only because it will make it easier to obtain a bond but because it could save them a really significant amount over the 20-year span of a bond.

“For a start, property prices have resumed a steady upward trend and the longer buyers wait now, the bigger the bond they are likely to need, and the higher their repayment will be every month. In addition, those who do obtain 100% bonds now sometimes have to pay a premium interest rate above prime, which could add much more than the initial deposit amount to the ultimate cost of their home.

“But buyers need more information about this and other long-term implications of their home financing decisions, and for independent advice on keeping their home acquisition costs down as well as obtaining the most suitable home loan, they should consult our experts – free of charge – as the first step in the buying process.”

SA market still among the leaders

According to the annual ‘Home Truths’ article recently published by The Economist, the rate of house price growth in SA is currently the third highest in the developed world at an average of 5%, with only Hong Kong (21,8%) and Austria (10,1%) doing better.

This may come as something of a surprise to those who have wondered just how much longer it will be before local property prices return to real-term growth, but The Economist’s figures also show that over the past five years (to end-2012), only six countries have experienced higher house price growth rates than SA.

These are Austria, Canada, China, Hong Kong, Singapore and Switzerland – and several of these, even China, are currently on a slower growth track than SA (see table).

The Economist points out that in Canada, for example, the annual rate of growth in the fourth quarter of last year was only 3,3%, compared with 7,1% a year earlier.

Meanwhile, although SA prices have only grown by 12,2% over the past five years, the local market still looks pretty good against the US, where prices have shown a 20,5% decline, not to mention Spain (-24,3%) and Ireland, where an utterly depressed market has seen property prices literally halve in the past five years.

And there is more good news for the SA market, too, in the latest Absa and FNB property publications.

The former shows that year-on-year housing price growth is now moving ahead of inflation in several areas (Port Elizabeth, East London and the KZN South Coast, for example) and in specific sectors in other areas, such as medium-sized housing in Mpumalanga, Limpopo and the Tshwane metro, and smaller housing in the North West and Northern Cape. Large homes in the Western Cape are also showing inflation-beating price gains.

And according to FNB’s latest survey of estate agents, the average listing time of properties declined to between 15 and 16 weeks, compared to almost 18 weeks in the first half of 2012. In addition, while 85% of property sellers still have to drop their price in order to sell, this drop has moderated from an average of 13% of asking price in 2011 to 10%.

Best of all, the survey showed that 13% of agents now regard stock constraints as a limiting factor when considering near-term market prospects. This is double the 6,5% of agents who cited stock constraints in 2011 and indicates a broadly improved balance between supply and demand in the market which should, in turn, underpin continued house price growth.