Mike van Alphen, National Manager of the Rawson Finance, the Rawson Property Group’s bond origination division, said this week that FNB’s statement that prices in former township areas have been appreciating faster than in former white suburban areas and this has been noticeably reflected in the rise of bond applications to Rawson Finance from buyers in these areas.
This year, said van Alphen, his team has seen a 20% increase in applications for bonds for affordable housing, i.e. housing priced below R600,000, and the indications are that this is set to continue.
The FNB House Price Index for former townships in the six major metro regions rose by a strong 17% year-on-year up from a revised 13,7% in the previous quarter. This, as FNB pointed out, was a significantly higher figure than the 7,4% recorded for the major metro house price areas. Van Alphen added that, like FNB, Rawson Finance had noticed that former township house price peaks seem to follow sometime behind the former white area peaks.
The FNB House Price Index for former townships in the six major metro regions rose by a strong 17% year-on-year up from a revised 13,7% in the previous quarter. This, as FNB pointed out, was a significantly higher figure than the 7,4% recorded for the major metro house price areas. Van Alphen added that, like FNB, Rawson Finance had noticed that former township house price peaks seem to follow sometime behind the former white area peaks.
“FNB has explained this pattern,” said van Alphen, “by suggesting that in the lower income affordable market limited financial resources and less access to relevant information tend to make the potential buyer’s reactions slower. They have also suggested that this makes the affordable market more volatile: the peaks go higher and the troughs deeper than in typical suburban areas. In the long run, however, FNB point out that these lower income areas do not outperform the more affluent areas.”
To us at Rawson Finance it is, however, very encouraging to see that there is a great deal of life in the affordable market, which is something we had anticipated for some time, and we have to give credit to the banks who are now awarding bonds to those who apply for the total, i.e. the 100% loans. It has to be pointed out that many buyers in the affordable market simply cannot move forward towards house buying as they have little or no savings. The award of a fair number of 100% bonds are, therefore, essential in keeping this market alive.”
“It has been said before but it has to be said again that consultation with an experienced bond originator – at no cost to the applicant – can be virtually guaranteed to improve the chances of that applicant’s bond being approved.”
For further information contact Mike van Alphen on 021 658 7100.
