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Send  Share  RSS  Twitter  25 Feb 2011

PROPERTY: Insolvency Drop Good News for Property

 





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There’s good news for property in the latest statistics showing a sharp drop in both liquidations and insolvencies last year.

That’s the word from RealNet MD Jan Davel, who says the figures indicate that the finances of both businesses and individuals are recovering from the effects of the recession, and that this will translate into an increase in demand for all types of property.

“In addition,” he notes, “it means that more of those potential buyers are likely to be in a financial position to secure mortgage finance from the banks.”

The StatsSA number show that the total number of company and close corporation liquidations fell by 14,9% year-on-year in December, and by an overall 3,4% in 2010, compared to an overall increase of 25,2% in 2009.

“Particularly gratifying is the 8,5% decline in close corporation liquidations last year,” says Davel, “because these entities are often owned by self-employed people who have been finding it particularly difficult to get bond finance.”

Meanwhile, the statistics also show that insolvencies fell 28,7% yoy in November, and by and overall 32,2% in the 11 months to end-November, compared to the 22,6% increase in the same period of 2009.

“Clearly, the financial position of many companies, close corporations and individuals has stabilized in the past year, enabling them to stay afloat and save or repair their credit records.

“At the same time, many organizations – and household budgets – have become ‘leaner and meaner’ in response to the pressures of the recession, clearing the way for debt reduction and increased savings that will further help applicants to secure bond finance.”

And more good news, he says, is that the decline in liquidations and insolvencies is expected to continue this year, although perhaps at a slower pace since no further interest rate cuts are expected. “This will no doubt encourage the banks to relax their lending criteria somewhat and enable more prospective buyers to achieve their goal of home ownership.”


 
 
 
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