Issue 11 / April 2008
THE BUYER IS KING
The strange property market we find ourselves in has spawned
a whole raft of characters we haven't seen in years.
The saddest of these is the seller who hasn't cottoned on
to the fact that it's a buyer's market and is still holding
out for a futuristic price. The FNB Home Loans Residential
Property Barometer last month revealed that activity in the
market had declined by 15% in the fourth quarter of last year,
compared with the same quarter a year earlier. More than 80%
of houses were now being sold for less than the asking price.
Estate agents and most mortgage originators are having a rough
ride. The Estate Agency Affairs Board reports that 26 000
estate agents out of the 82 000 it licensed last year did
not renew their licences this year.
Amid the gloom, the properly qualified buyer holds the trump
card. In the light of this, it is astonishing that even agents
from the top companies are wasting their time with buyers
who are not properly qualified. It's hard enough, in this
market, to work a seller down to accepting a realistic offer.
To achieve this and then have the deal fall out of bed because
the buyer can't get a bond is unforgivable.
The banks no longer pre-qualify buyers and have shifted this
responsibility onto the mortgage originators, most of whom
couldn't be bothered with pre-approvals because they so seldom
result in a registered bond. The Bond Man, by contrast, welcomes
the opportunity to process pre-approvals and invites all prospective
buyers to complete
the 1-minute application on our website.
I WERE TITO...
In my last newsletter, I posed the question "What
would you do if you were Tito?" This preceded
the announcement by the Reserve Bank Govenor of the 8th
interest rate hike in 12 months. The idea was to stimulate
thinking on ways to fight the inflation monster by more
creative means than mere knee-jerk responses. I was swamped
by the number of suggestions that poured in. All were
thought-provoking, many were innovative, some bizarre
and others hilarious. My favourite responses were,
alas, unprintable and in the end I opted for Thania Olivier's
pragmatic approach as the winning entry. I was delighted
to present her with the Balthazar of Laborie Cabernet
far be it for The Bond Man to presume that readers of
my newsletter had a hand in influencing Mr Mboweni's
decision, but I did send a selection of your responses
to the Reserve Bank's Monetary Policy Committee and,
lo, amid overwhelming speculation that rates would rise
again at the end of January, they held firm!
The reality is that the Governor remains hawkish and
most economists predict a further 50 basis points rise
when the MPC meets again next week. Dawie Roodt, chief
economist at the Efficient Group, has called for a full
1% rise, arguing that "shock therapy" is needed
to restore the bank's credibility as an inflation fighter.
"We should take the knock now", he says. If
Tito takes his advice, overdraft and mortgage
rates wll rise to 15,5%.
THANIA OLIVIER WROTE...
Government cannot rely only on traditional monetary
or fiscal policy solutions to combat inflation - a stable
price level, minimal unemployment, as well as more long-term
measures are required for bringing about a lasting decrease
How to achieve these? Distinguish between two groups,
each of which needs to be addressed:
- Fiscal & taxation proposals which would restrict
the growth of lending - providing for short-term and
medium-term policy implementation;
- Measures targeted at the labour market, productivity,
energy and competition - providing for medium to long-term
Practically, issues such as the following could be
- Revise budget base spending for all government departments
with an aim to do away with unreasonable expenditure
and to not increase the number of employees in the
- Raise economic activity and boost productivity in
the labour market; stimulate competition, especially
in 'problem' areas such as retail and construction.
- Impose a tax on income from the sale of real estate
which the seller had owned for less than 3 years to
- Exercising tight measures on growth of lending as
we've recently seen with implementation of the new
Credit Act is a start. Furthermore, introduce a single
'body of borrowers' or ability to cover all financial
institutions will allow for establishing the true
extent of a client's debt commitments.
- In the energy sector, boost energy efficiency and
allow restriction of energy consumption in support
of minimizing the effect that the expected rise in
prices in this sector will have on households and
WHAT'S IN A NAME?
me to take a friendly swipe at my friends and former colleagues
at MortgageSA, which has just changed its name to ooba (I
kid you not). Curiously, at the time of writing this, the
company is putting out both MortgageSA and ooba ads in the
print media, which must create enormous confusion.
South Africa's mortgage origination giants have virtually
unlimited financial resources at their disposal, and access
to the best ad agencies and creative brains in the land. As
a one-man show with an almost non-existent marketing budget,
I have always regarded these Goliaths with a mixture of envy
and dismay. Some of the things they come up with leave me
cold! How I would love to have been a fly on the wall in that
shareholders' meeting when the new name was signed off. What
stupendous powers of persuasion must have prevailed!
I visited their website to find out what ooba meant, but
all I found was the following question: "Want to really
understand what our brand stands for and how we get you closer
to your ideal home? Take a look at our brand new TV commercial".
It turns out that that's a rhetorical question. I looked at
the brand new TV commercial. I taped it on my PVR and re-played
it over and over again. I called in mates of mine from the
advertising industry to view it and none of us could figure
out what the brand stood for, let alone how it could get us
closer to our ideal home.
Incidentally, if you thought that what was once SA's
leading mortgage originator had secured its own dot com domain,
Or, if you don't believe me, visit www.ooba.com.
THE BOND MAN FEATURES IN THE PROPERTY MAGAZINE
The Property Magazine chose to profile The Bond Man in their
March edition, the first time they've featured a mortgage originator
in their Property Profile. Free publicity in a magnificent publication
like this doesn't come round often and I was thrilled to be
the subject of their lavish double page spread.
Click here for the full
ASK THE BOND MAN
Those of you who are regular readers of The Property Magazine
will be familiar with my monthly Ask
The Bond Man column.
If you have any questions about bonds, please feel free to submit
them here and I'll do my best to answer them. If your question
is chosen for publication, you'll win a year's subscription
to The Property Magazine
Click here to Ask The Bond
The Bond Man
BOND MAN'S PROPERTY PICK OF THE MONTH
Asking price: R2,300,000
In my opinion, this little gem represents the most
outstanding value in the current market. If the 3 rules
of property investment are Location, Location, Location,
you simply can't do better than this.
Set in the very best part Cape Town at the foot of Table
Mountain in exclusive Higgovale, this double-storey cottage
is one of only 4 properties within a secure complex that
boasts 200-year old oak trees and a stream running through
it. The setting is nothing short of idyllic; a combination
of wooded wonderland and sunny garden with views over
The property is in immaculate, ready-to-move-in condition
but the best part about it is that it offers huge potential
for future development. Within its existing footprint,
this would not be the ideal family home, but it's absolutely
perfect for a professional couple looking for a peaceful
haven in a wind-free, quiet and leafy part of town. The
fact that its true potential has still to be realised,
makes this the cheapest property (by far) in the most
Accommodation comprises 2 large bedrooms & bathroom
upstairs, with the living area, kitchen & guest loo
downstairs. The lounge has a cosy fireplace and double
doors leading onto a sunny north facing garden with views
over the harbour. Security system throughout and a lock-up
For more information and to make an appointment to view,
please contact Bernice Musikanth at Seeff on 021 423
9146 or click
here to view the web page.
In the 4th quarter of last year, house prices in the
luxury segment (houses valued between R2,7m and R9,9m)
increased by 7,7% y/y to about R4,2m on average in nominal
terms (8,4% y/y in the third quarter). In real terms,
prices dropped by 0,6% y/y in the fourth quarter compared
with an increase of 1,3% in the third quarter. This has
been the first real price decline recorded in the luxury
segment since the fourth quarter of 2002, when a drop
of 0,7% y/y was registered, and can be ascribed to deteriorating
market conditions. - Source: ABSA Home Loans Housing Review
Penalty Interest Fee
We all know that you need to give the banks 90 days'
notice of your intention to cancel a bond to avoid being
hit with a punitive cancellation penalty, but until
now the banks were happy to waive this penalty if your
placed your next bond with them. Absa has announced
that, with immediate effect, the Penalty Interest Fee
may not be waived under any circumstances, even if the
client places his next bond with Absa. Any home loan
that is closed, where customers have failed to give
Absa 90 days' prior notice of their intention of such
closure, will attract 90 days' penalty interest. In
cases where customers give notice within a shorter time
frame than 90 days, the interest calculation will be
reduced by such period (i.e. if a client gives notice
30 days before account closure, he will only be liable
for the remaining 60 day period - 90 days less actual
days notice given).
Telephone: +27 (0)21 433 1060
Fax: +27 (0)21 433 1062
Mobile: +27 (0) 82 453 7374
204 Main Road, Sea Point