Betterbond Advises Caution Among Borrowers - 12-11-08

December 11 - Potential homebuyers seeking to make a purchase in the new year in the hope that conditions will improve, should heed the advice of Deon Lessing, the marketing director of Betterbond.

According to Lessing, conditions in 2009 don't look set to improve, especially in the first half of the year and that South Africa would still be a "debt-ridden society". He said that although it is expected that the government will cut the interest rates by at least 300 base points, it will still take long for changes to be felt in the economy.

"The banks are still adhering to strict lending criteria," said Lessing, "so obtaining bonds will only be for those with a good payment profile, with a deposit and who can demonstrate affordability."

Lessing reacted to industry news that house prices are set to decline in real terms in 2009, a fact that has been confirmed by ABSA. He noted that this may not be a bad thing, especially if people had money to invest in property at this stage.

"The decline in house prices will bring about buying opportunities for investors looking to expand their buy-to-rent portfolio," he said. "There will be many property deals available to buyers who have a deposit and clean payment profile or enough money to buy a property with cash. With banks asking for higher deposits and only 50% of bond submissions approved, it will be people with money that will be in the driving seat in 2009."

Lessing concluded: "The global recession has also led to the opportunity for South Africans to buy property in countries like the UK, where housing prices have also dropped significantly."