If you are a potential home buyer in the R350 000 to R900 000 bracket, Parow Valley in Cape Town is encouraging as prices are low. However, if you want to sell your home, you might not find the situation as heartening as the price drops of recent years show no signs of being worked out of the system.
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Alvin Suklall, the Rawson Property Group’s franchisee for the area says there has been almost no upward price movement in three years in the homes that he has sold and in real terms most have lost between 15 to 25 percent on their former high prices, which he believes in the boom years, may have been overvalued.
Suklall explains that a home which, as far as back as 2005, might have been priced between R1.2 million to R1.5 million can now be had for under R1 million. Similarly, a home in Matroosfontein recently brought to the market with a price of R900 000 was only able to reach R750 000.
“The puzzling aspect of the current situation is that sellers often don't accept that there has been a recession and price falls," Suklall says. Sellers stick to unrealistic prices despite agents giving them calculated comparative market analyses. He says when it finally dawns on them that their valuations were correct, they often take their homes off the market.
When the over-pricing problem occurs, Suklall says it can in part, be attributed to the last valuations done by the municipality in 2009. These reflect the boom conditions before the bust and the fact that a number of homes were not visited before being valued and the valuation was done on the plans. He says many of these valuations are therefore over-priced. For example, a home in Matroosfontein, which had a municipal valuation of R710 000, was sold for R650 000.
Alvin Suklall, franchisee of Rawson Properties Parow Valley, with a three bedroom Parow Valley home previously valued at R1.1 million and now valued at R950 000.
One of the bonus factors of looking to Parow Valley for a home, however, is that the district is large and can offer such a wide variety. Suklall’s services cover Parow Valley, Cravenby, Ravensmead, Elsies River, Matroosfontein, Bishop Lavis, Bonteheuwel, Valhalla Park, Montana, Monte Vista and Charlesville. There are 14 000 homes, of which 600 are sectional title. With so much to choose from, even the lower income home buyer will find something suitable if he remains diligent and keeps at it.
Finding a home may, in the end prove the easier part of the home acquisition task obtaining a bond can be a frustrating task for many local lower income buyers. Suklall says only a few of his buyers find they can afford a 10 or 15 percent deposit as well as the fees associated with a house sale. A significant percentage, especially those in Valhalla Park and Bonteheuwel, also have impaired credit records.
He says the obvious solution of taking out a personal loan as well as a bond may not work because the banks are likely to decline the bond on the grounds of the fact that the applicant is now over-borrowed.“The criteria here remains as strict as ever,” says Suklall.
He believes he is now the dominant agent in his territory and he is definitely not prepared to share a mandate.He says open mandates are seldom efficient because the agent is reluctant to spend adequate time and advertising revenue on a home that may be sold by another agent.
Looking ahead, Suklall says a discernible improvement in the entire Cape Peninsula housing sector will probably become evident within a year, if only because demand remains so strong.
He says if and when more 100 percent bonds become available, and he says in many cases the applicants who come through them are steady, reliable workers, their area will be the first to see a significant upswing.
Some idea of the difficulties facing an agent or bond originator trying to help a bond applicant can be gained from the fact that, at the moment, Nedbank only awards bonds to people who bank with them, whilst Absa will give 70 to 85 percent bonds to non-clients and Standard Bank have recently been giving loans up to 100 percent, even to non-clients. In addition, certain banks will impose a list of other criteria before they give a bond.
Suklall says that “although the banks regularly publicise the fact that they wish to assist the lower middle class, under the present rulings there are still so many hurdles to overcome and this can be a very tiring and sometimes frustrating business”.