Absa's housing "fire sale" of the year
Realestateweb reporter
06 October 2008 Article rating:-->
Homes, plush and modest, in special distressed sale auction in Pretoria; other banks to follow suit.
Big four bank Absa is to offload not far off 70 homes, ranging from plush to modest, in its biggest mass "distressed sale" auction of residential properties in Pretoria next week.
The Alliance Group recently launched a rapid auction programme for the bank, selling off properties en masse where owners can no longer meet their debt obligations.
The auctioneer announced on Monday it would be conducting its biggest ever rapid auction yet, on 16 October (Pretoria Country Club).
It revealed, too, that other banks have signed up for rapid auctions to get properties off their books.
The special auctions are being held regularly around the country, with about 200 homes being passed on to the auctioneer by Absa each month, said the auctioneer.
Rising interest rates and slowing economic growth have been putting financial pressure on home-owners across income groups while emigrating sellers have been adding stock to the market in large numbers.
Estate agents have struggled to sell properties this year, with FNB Home Loans reporting this week that the average time to sell a home has now stretched from about three-and-a-half months in the second quarter of the year to more than five months.
FNB said on Monday, when it released its quarterly barometer on the residential market, that investors have been increasingly returning properties to the market at break-even prices and for less than they paid.
The rapid auction programme "helps defaulting homeowners to sell their properties through a voluntary and non-compulsory sales channel whilst working closely with the banks and bondholders to minimise debt write-offs", said the auctioneer.
"Other banks have also signed up for the ‘Rapid Auction Programme' and the banks themselves are counselling their defaulting and distressed clients, with whom sales mandates will be signed directly," said Alliance's Gary Serebro.
There are a number of residential properties on offer, ranging from a magnificent five-bedroom home in Centurion, a four-bedroom home in Magalieskruin with a gym and jacuzzi, a three-bedroom villa in Pretoria North to a stunning 4-bedroom thatched home in Glen Austin, said Serebro.
Additional properties, he said, include: a two-bedroom home in Moreleta Park, and a number of vacant plots in Kosmos.
Absa told Realestateweb recently that professionals, like doctors and lawyers, are among those hardest hit.
Gavin Opperman, Absa Home Loans chief executive officer, said consumers were not going to doctors and dentists and were not paying their medical aids.
He cited the example of a property he handed over for auction after a medical professional who put down a deposit of R3m, plus costs, and was repaying the balance of R7m with a mortgage could no longer keep up with his debts.
The professional paid R10m about 18 months ago for his home and was struggling with home loan repayments of about R100 000/month. Particularly depressing is that the owner can expect to fetch 50 to 60% of that market value on auction.
This is not an isolated case, said Opperman. He added that Absa would assist individuals like this who contact the bank as soon as they spot they are heading into financial trouble.
"These people will bounce back. We'll restructure the debt and he will rent for a while," said Opperman referring to the medical professional who is about to see his dream home go under the hammer.
He said individuals in the affordable housing space were not as hard hit as the upper income earners. Neighbours and friends in lower income areas tend to help each other with debt repayments, unlike the top-end luxury housing market, he said.
