While the distressed property situation in South Africa has improved since the beginning of the year, assisted by steady price increases in the lower price ranges and a resolve from homeowners to reduce their levels of debt, they are still very much a part of the new property landscape that we find ourselves in, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
RE/MAX of Southern Africa reports that its assisted sales department has been handling an average of 50 distressed property sales each month, down on the 2012 average which was almost double that figure.
Goslett notes that even though trading conditions within the South African property market have shown noticeable improvement over the past year, the TransUnion SA Consumer Credit Index for Q3 2013 indicates that consumer loan defaults continue to rise and that household cash flow is deteriorating as living costs rise and job losses take their toll on incomes.
He says that the TransUnion data also shows that older loan portfolios still seem to be deteriorating. Added to this, current unrest in the labour market is dampening economic prospects and potential growth which could have an impact on unemployment levels in the medium term.
“TransUnion indicates that the household cash flow situation may be as challenging as early 2009, and job losses and job insecurity are intensifying the challenges that the increased cost of living are creating for consumers,” he says.
“The fact remains that economic conditions are still challenging and consumers are still battling to control their levels of debt and adjust to the financial demands of the increased cost of living,” says Goslett.
He goes on to say that this is why RE/MAX of Southern Africa has continued with training its agents to handle this specialised kind of sale.
“When it comes to handling distressed properties, it’s not just about selling a home, it’s about helping people deal effectively with a stressful financial situation.”
Goslett explains that when homeowners reach the point where they can no longer afford to stay in their home, the best alternative for both the homeowner and the financial institution that holds the bond is to relook at the finance options or to sell the property for the best price in the shortest possible space of time.
“The primary concern for us, and the financial institutions, is to keep the homeowners in their property and to look for a way for the bank to restructure the debt so that it is more affordable or to sell the property with minimum impact to the owner’s capital or credit record.
“Should this be the case, it is in the homeowner’s best interest to make use of a reputable estate agency that has agents who are qualified to handle the nuances of a distressed sale.” – iafrica.com
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