High Deposit Demands Affect Home Buyers - 03-26-09

March 26 - Property agents operating in areas such as the Free State and other small town locations are bemoaning the fact that the current policy by South African banks to demand a high deposit on the potential property, is making it virtually impossible for first time buyers to purchase in these areas.

As a result, there has been a steep decline in the number of properties sold in towns such as Villiers, Tweeling and Cornelia, for example, as first time buyers struggle to come up with the 15 - 20% required by banks before a home loan application is approved.

"Salaries in country areas are lower than in metropolitan areas and whereas prospective buyers may be quite able to keep up with monthly bond repayments, they just do not have the means to pay the required 15 to 20% deposits up front," commented a Free State Aida franchise owner, Dewald van der Merwe.

Van der Merwe said that, as a result of the tighter bank restrictions, smaller towns have been struggling to sell property since the middle of 2008.

On the flip side, those who have the money to purchase property without the need for financing from banks, or those who have the capital to put up for the deposits required, are finding a number of super bargains in rural areas.

"Since December, there has been a sharp increase in enquiries from prospective buyers in Gauteng, for example, who are hunting for investment properties," said van der Merwe.

Farms are especially sought after, especially with traditional restrictions placed on the sale of family owned farms now running out.

Investors are buying farm property and placing the rest of their capital in investment funds.