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More loan applications for affordable township homes

17 Sep 2015

FNB’s statement that prices in former township areas have been appreciating faster than in former white suburban areas, has been noticeably reflected in the rise of home loan applications from buyers in these areas.

This two bedroom house in Protea Glen, Soweto, is selling for R550 000 - click here to view.

This is according to Mike van Alphen, national manager of the Rawson Finance, the Rawson Property Group’s bond origination division, who says this year they've seen a 20% increase in applications of home loans for affordable housing, that is property priced below R600 000, and the indications are that this is set to continue.

Van Alphen says 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.

He says like FNB, they have noticed that former township house price peaks seem to follow sometime behind the former white area peaks.

“FNB has explained this pattern 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, these lower income areas do not outperform the more affluent areas.”  

This home in Soshanguve, Pretoria, has three bedrooms and an open-plan kitchen. It is on sale for R500 000 - click here to view.

Van Alphen says to them it is, however, encouraging to see that there is a great deal of life in the affordable market, which is something they had anticipated for some time, and they have to give credit to the banks who are now awarding home loans to those who apply for the total, that is the 100% loans.

He says many buyers in the affordable market cannot move forward towards house buying as they have little or no savings. The award of a fair number of 100% home loans, 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 home loan being approved,” he says.

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