Distressed properties coming onto market stabilise

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Goslett says this is a good sign and an indication that consumers are managing their debt situations better and are planning ahead for tough financial times.

This sentiment is supported by the TransUnion SA Consumer Credit Index for the first quarter of 2015, which indicates that consumer credit health improved in the first quarter at its fastest pace since 2011. The index also states that household cash flow continued to improve in the first quarter on the back of a sharp decline in non-discretionary consumer inflation which has helped household budgets.

But Goslett points out that even though there has been some improvement in consumer money management, the estimated national household bank debt as a percentage of disposable income is at 77.3%, which is a very high number. Added to this, Goslett says that there will be continued pressure on household income with fuel increases, electricity tariff increases and the increasing cost of groceries.

From boom to bust

There is no doubt the housing market has been up and down during the last decade, going from boom to bust and slowly recovering again. "Even though things are looking up after a few tough years, distressed properties will remain a reality in the property landscape for the foreseeable future as some home-owners will undoubtedly find themselves unable to cover the cost of home-ownership," he says.

The average price of a distressed property handled by the RE/MAX assisted sales department is sitting just over R1m, with 70% of the properties based in Gauteng, followed by 10% in the Eastern Cape and the Western Cape, 5% in KwaZulu-Natal with the Northern Cape, Free State, Limpopo and Mpumalanga accounting for just 5% combined.

Goslett explains that when home-owners reach the point where they can no longer afford to stay in their home, the best alternative would be to relook at the finance options or to sell the property for the best price in the shortest possible space of time. "The primary concern for us, and the financial institutions, is to keep the home-owners in their property and to look for a way for the bank to restructure the debt so that it is more affordable or to sell the property with minimum impact to the owner's capital or credit record."

Owners have an option

He points out that home-owners shouldn't wait until they are about to lose their home to sell it through an assisted sale programme. "Home-owners who find themselves in financial difficulty have the option of voluntarily selling their home with the assistance of the relevant financial institution which holds the bond in order to avoid a forced sales scenario."

Goslett concludes by saying that consumers need to continue paying careful attention to their finances and paying down debt as much as possible. "The key for homeowners who see a financial problem coming in the future due to job loss, a reduction in benefits, unforeseen capital expenditure, possible future interest rate rises and cost of living increases, a death in the family or any event which would impact heavily on finances, is to contact their financial institution or a real estate professional to assist them and discuss the options before it is too late."