Rich forced to give up homes

Johannesburg - The number of auctions in the luxury property market is on the increase as more wealthy South African home-owners struggle to keep up their bond payments.

Statistics indicate that luxury homes currently comprise 2% of all total stress-driven sales.

Based on value, however, these sales represent 18% of the market, according to new statistics from the Alliance Group.

About 1 200 houses are being auctioned every month.

Alliance chief executive Rael Levitt says the stricter credit environment and increasing unemployment are taking their toll on the luxury property market.

This is reflected in the number of home-owners struggling to meet the instalments on their jumbo mortgages. Jumbo mortgages are those on which more than R5m is still owing.

Even those with super-luxury homes are being forced to sell them at a discount or have them auctioned, notes Levitt.

In places like Franschhoek, Clifton, Sandhurst and Umhlanga, which were not previously affected by stress-related selling, such sales are on the rise.

"Those home-owners who borrowed against their properties are now in dire straits."

Stress-driven sales handled by Alliance include a wine farm in Franschhoek sold for R22m, and two houses in Clifton and Camps Bay disposed of for R12m and R5.7 respectively.

Levitt observes that this is significantly below the properties' asking prices last year.

In Sandhurst, the most expensive residential area in Gauteng, a super-luxury mansion was auctioned off for R65m in December and another five houses in the suburb will soon be under the hammer.

He says his group is also handling several golf estates in difficulties.

- Sake24.com

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