Fewer houses under the hammer

Johannesburg - Auctions are no longer being swamped with forced sales of houses, as they were earlier this year.

At the same time the prices being paid at auctions for homes whose owners are in arrears with their bond repayments have begun to improve in the past two months.

Rael Levitt, chief executive of the Alliance Group, expects the group to handle about 320 distressed sales in September, after August's 500 and the 500 or so a month for most of this year.

He expects the number to decline even further and says prices have improved. "Houses being sold on auction are now selling for about 15% less than during the boom, compared with 30% less earlier this year."

John Loos, an analyst at the home loan division of First National Bank, says that since February the bank has seen a decline in the amount of bond arrears.

He says this is largely owing to the lower interest rates that have improved affordability, and not because households' debt levels have improved.

These days banks are encouraging prospective buyers by offering 100% mortgage loans for distressed homes that are being disposed of.

Later this week the Alliance Group is auctioning one of the property assets of the Fidentia Group. This property, in the luxurious suburb of Eversdal in Belville, is being run as a guest house and conference centre.

The property comprises 3 332m² and the guesthouse has 27 bedrooms, 17 of which have en suite bathrooms.

Levitt expects the guesthouse could sell for between R3m and R4m. The auction is set down for September 16 at The One & Only hotel at the V&A Waterfront.

In the past year the books of auction houses have not only been overrun by forced residential sales, but commercial property assets of liquidated companies have also come under the hammer from time to time.

The ClareMart Auction Group recently sold the former head office and warehouse of Canterbury South Africa in Woodstock, Cape Town, for R18.66m.

This was after the company, which manufactured Springbok rugby jerseys, was liquidated in January this year. The property includes a warehouse, factory and A-grade offices extending over 5 800m². ClareMart's Jonathan Smiedt, who conducted the auction, said it was bought by a South African bidder.

Levitt says that, unlike residential property, commercial properties fetch market-related prices at auctions, largely because most are not sold under pressure.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.