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Johannesburg - The number of homeowners in arrears with their bond payments is rising alarmingly.
In the fourth quarter of last year 35 000 homeowners were in dire straits because they were four months or more in arrears with their monthly bond instalments.
This figure had risen from 8 000 in the third quarter, according to the Alliance Group's latest figures for the fourth quarter of 2008.
At the same time homeowners who were two months behind leapt from 75 000 in the third quarter to 130 000 in the fourth.
Alliance Group chief executive Rael Levitt says these figures reflect the fact that the housing market is in a deepening depression, aggravated by banks stricter lending criteria.
He says stress-driven sales are on the increase and about 12 000 houses are being sold under pressure each month.
As a result homeowners land in the unenviable position where their house is sold for less than the outstanding mortgage debt, which means they remain indebted.
He says it will take some time for the effect of the two interest rate reductions of 0.5 percentage points in December and one percentage point in February to work through into the market. "The Monetary Policy Committee needs to lower interest rates more aggressively to speed up the effect."
The 35 000 who are four months or more in arrears are in danger of losing their homes, which could lead to a flood of properties being dumped on the market.
Erwin Rode, property valuer and economist from Rode & Associates, says the figures are bad news for house prices.
"The US banks' repossession of houses caused the housing market to implode," he observes. What happens is that there is an oversupply of stress-related sales in the market, but on the demand side there is a dearth of buyers because of banks stricter lending criteria.
He says that it can take nine months or more for the positive effects of interest rate cuts to filter through to the market.
And, with the additional prospect of further job losses, an even darker cloud hangs over the housing market.
- Sake24.com
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