MAR­KETS

Weekend Witness - - Money -

THE r and t ested fr esh eight ­month lo ws against the dol­lar yes­ter­day, hit­ting 11,2605.

Yields on g overn­ment bonds r ose 8 ba­sis point s t o 8 ,245% on the bench­mark 2026 is sue.

Stocks ek ed out g ains y es­ter­day, snap­ping a f our­day lo sing s treak. The mark et is s till un­der pr es­sure and the bench­mark Top­40 inde x clock ed up it s bigg est weekly de­cline since June last year and is on c ourse for it s steep­est quar­terly fall since the thir d quar­ter o f 2011. The inde x is do wn 3, 1% this quart er, which ends on T ues­day, the big­gest f all sinc e the s ame quart er in 2011 when it f ell mor e than s even per cent.

Lon­min clo sed 2,5% lo wer as the pr ecious metal fell 0,4% to $1 300,49 an ounce.

The T op­40 fin­ished 0 ,37% higher at 44 507. The wider All­shar e inde x added 0,32% t o 44 663. — R euters.

“Theia ve­r­agei­home­ipric ei ro­seiy1i­inithei­w0i­monthsi toiend3A ugust­ti­whilei­thei av­er­ageiw agei­incr ea­sei wa­sion­lyi­aboutiw12 ”

The rea­son is the short age of r es­i­den­tial stock f or sale in popular ar eas and lack of new de­vel­op­ment to take up the slack, which has caused house pric es to rise f aster than ex­pected, he said.

Th­ese price in­creases make it more dif­fi­cult f or pr os­pec­tive bu yers t o qualif y f or home loans now, even if they are able to bor­row at prime.

The av­er­age home price rose eight per­cent in the 12 months t o end­Au­gust, while the av­er­age wage in­crease was only about six per­cent. “At the same time, the higher c ost of liv­ing as well as in­ter­est rate in­creases to­talling 0,75 per­cent­age points since the be gin­ning of the y ear, have eaten into the “fr ee” in­come avail­able to cover a home loan re­pay­ment,” said R ade­meyer.

The best course for prospec­tive home buy­ers now was to try to save up big­ger de­posits be­fore en­ter­ing the mar­ket to make it eas­ier for them to qual­ify for a loan and lower their monthly home lo an ins tal­ments.

“In ad­di­tion, they should ob­tain pre­qual­i­fi­ca­tion f or a home lo an be­fore s tarting to look for a prop­erty, so they know what they can re­al­is­ti­cally af­ford — be sure to ap­ply for their lo an thr ough a r ep­utable mort gage orig­i­na­tor as this will give them a much bet­ter chance of se­cur­ing an ap­proval,” he said.

Mar­cus last week de­cided to keep the repo rate at 5,75% and prime (as well as the vari­able home lo an int er­est r ate) at 9 ,25%.

As a r esult, the r epay­ment on a 20­y ear home loan of R757 125 — the cur­rent na­tional av­er­age ap­proved bond amount — s tays at R6 934.

The re­pay­ment on the av­er­age home loan of R586 705 that is cur­rently be­ing ap­proved for fir st­time bu yers s tays at R5 373.

Se­eff chair­per­son Sa­muel Se­eff said home sales ac­tiv­ity is show­ing real up­ward move­ment in the pri­mary ur­ban sec­tors and in the sec­ondary c oastal mar kets.

“Buyer ur­gency has grown, there is limited sup­ply of prop­erty … Mul­ti­ple of­fers are be­com­ing c om­mon­place with seller s g et­ting close to and, in some ins tances, more than their ask­ing pric e. Where it t ook about 20 weeks to sell the a ve­r­age home pos t 2009, it no w t akes about t wo weeks,” said Se­eff .

San­lam economist Arthur Kamp said real in­ter­est rates, in­clud­ing the R es­erve Bank’s repo rate, re­main well be­low his­toric av­er­ages and the in­surer ex­pects the bank to shift to­wards a le ss ac com­moda­tive s tance o ver time.

“On bal­ance, the be st we can sa y is that the bank will pr obably con­tinue to hike its pol­icy rate al­beit at a se­dat e pace into 2015 … given the per­sis­tence of low­risk free real in­ter­est rates abroad, we ex­pect the do­mes­tic real pol­icy rate to re­main low rel­a­tive to its long­term av­er­age for an e xtended pe­riod,” he said.

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