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Reposessions Surge In South Africa

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Forced home sales surge 75%

Jan 29 2008 11:33 AM

Joan Muller

Johannesburg - The number of over-stretched SA property owners losing their homes under the hammer rises to record levels.

Alliance Group CEO Rael Levitt says so far this month, forced property sales are up 75% compared with January 2007.

The group, one of SA's largest auctioneers, has handled more than 1 200 distressed sales/month since October last year. These include sales in execution (bank foreclosures), homes where mortgage repayments have been in arrears for at least three months and insolvent estates.

A large chunk of these sales are multi-million rand holiday homes in posh seaside resorts such as Plettenberg Bay, Knysna, St Francis Bay and the KwaZulu-Natal north coast.

Levitt says he has never seen so many luxury, leisure properties - typically priced at R7m plus - on the distressed sales book.

Further forced sales expected

He expects the number of forced sales to rise further over the next few months as higher interest rates continue to filter through to the market.

It seems that many of these sellers are new entrants to the property market who bought at the height of the boom and never anticipated higher interest rates and slower house price growth.

Says Levitt: "Before the National Credit Act was introduced, banks were providing easy money for people to buy rental properties and second homes. Inexperienced investors happily overextended themselves expecting property values to continue to rise."

Although Levitt doesn't expect a "massive" drop in house prices, he maintains that too many South Africans mistakenly believe that values will move in a one-way direction forever.

Levitt notes that some top-end homes are already being sold on auction at a 25% discount to original asking prices. "Property valuators will clearly need to adopt a more conservative approach than the over-exuberant one that has been the norm in recent years."

Levitt has already told his valuators to be more cautious when using historical housing data to determine market values, a move that will no doubt force both sellers and estate agents to become a tad more realistic in their asking prices over the coming months.

- Fin24

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Nah, mate - it's the Aussies that belong behind bars... ;)

Boet? Why do you care about SA still, are you ever going to go back and live there? From what I hear, we don't have electricity at times due to "Load Shedding". That country is a joke run by more jokers than any other card in the pack. Also, from what I hear, everyone is loving the credit there and ANC needs that get growth. No one has the cash anymore. It will get worse. And typical of SA. No cash == more violence.

Just my thoughts. What you think?

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  • 315 Brexit, House prices and Summer 2020

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      • down 5% +
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