SA house market faces skills shortage
2009-02-26
If property has always been your passion, you might want to consider making it your career in South Africa in the future. An article on Property 24 cites sources who are concerned that South Africa might be facing a serious skills shortage in the housing industry once the housing market recovers.
During the housing market’s downturn, many experienced mortgage originators and estate agents exited the market. The estimated 40% drop in housing transactions last year made it increasingly difficult for property professionals who are dependent on a commission-based income to make a decent living.
In fact, Rudi Botha, the CEO of the PA Group, estimates that South Africa has lost up to 70% of its pool of home loan consultants and orginators.
“Two years ago at the height of the property boom, around 5 000 individual intermediaries were active in the housing market. If there are 1 500 left today, that would be a lot,” Botha told Property24.
He estimates that the amount of registered estate agents has also dropped dramatically, from around 80 000 in 2007 to less than 30 000 currently.
But the lower sales volumes and falling house prices aren’t the only issues affecting the income levels of those real estate professionals. The stricter lending criteria introduced by banks have also squeezed their incomes.
Botha says the monthly value of mortgage applications approved through BetterBond have dropped by a staggering 65% since May 2007.
These conditions have forced thousands of real estate professionals to look for alternative employment which now raises serious questions about the industry’s ability to meet the needs of property buyers and sellers when market conditions improve.
He believes one key factor that would prevent a further exodus of experienced home loan consultants and estate agents would be the willingness of banks to start lending again. “Interest rate cuts alone will not kick-start a housing recovery. Banks also need to relax their lending criteria, particular in terms of loan-to-value ratios.”
According to him, most banks currently require deposits of 20% to 30%, making it impossible for many homebuyers to qualify for mortgage finance. He says it would help a great deal if banks were to reduce their deposit requirements to 10% or 15% of the purchase price.
At least it’s a relief to know that the market is expected to turn again in the near future. Perhaps a qualification as a real estate professional won’t be such a bad investment in one’s future either?