Property in high density urban areas performing well
Recent reports that the fast appreciating growth rate in house prices has begun to slow somewhat have resulted in a flood of anxious enquiries about the likely future performance of the residential property market according to Bill Rawson, Chairman of the Rawson Property Group, who says, regardless, the overall picture remains positive, and this is a message potential home buyers must be given.
“The national growth rate, now at around 5.5%, is more or less in line with the inflation rate and, we would all agree, not particularly exciting, especially as in many of the country areas the growth rate is now below 4.5%.”
However, he says what sceptics have to realise is that 80% of the bullish statements put out by estate agents countrywide refer to property in the major metropolitan areas, like Tshwane/Pretoria, Ethekwini/Durban, Johannesburg and Cape Town, with Port Elizabeth now starting to shape as another good performing area.
Household credit and home loan growth under pressure
With interest rates forecast to continue to rise before the end of the year, as well as in 2016, growth in household credit balances, including home loan balances, is expected to remain under pressure over the next 12 to 18 months according to Jacques du Toit, Property Analyst for Absa Home Loans, who says this is reflected in the Absa Credit and mortgage advances report.
He says trends in the economy, household finances and consumer confidence are key factors in driving the demand, as well as the accessibility and cost, of mortgage finance and household credit.
According to the report, the outstanding value of household mortgage balances increased to R845 billion in the first half of 2015, showing growth of 2.8% year-on-year (y/y) recorded over the six-month period.
The road ahead for South Africa's property market
Housing demand still exceeds supply in most parts of South Africa, and this situation is not expected to change for the rest of this year, despite the possibility of a further rate rise according to Richard Gray, CEO of Harcourts Real Estate, who says the rate of house price growth is expected to moderate from the 8% to 9% achieved last year to around 6% in 2015, thanks to the negative effect that rising interest rates have on affordability.
“Having said that, though, the Reserve Bank has been saying for some time that it planned to start ‘normalising’ interest rates this year, and the anticipated effects have, to some extent, already been discounted by the market,” says Gray.
Property24 survey reveals how SA feels about property
What do South Africans think about our local property market? Property24 did a survey to find out, and here’s what you had to say about: Is 2015 a good year to sell property?
- Is 2015 a good year to buy property
- Biggest chalenges when buying property.
- Biggest concerns when buying property.
- Reasons for wanting to buy.
- Rating the service from estate agents.
Obsolete buildings: opportunities for savvy developers
Significant changes in technology, workplace practices and production requirements have all resulted in an increasing number of commercial and industrial buildings in South Africa becoming obsolete.
According to Ken Reynolds, Regional Executive in Gauteng for Property Finance at Nedbank Corporate and Investment Banking (NCIB), the result of this is that more and more developers and building owners are realising the massive redevelopment potential of these structures and are engaging in projects to bring them in line with current market requirements.
Buying or selling? Make sure you understand your market
Just about everyone knows that the real estate market is cyclical, or that there is sometimes more demand for homes than the supply of properties for sale, and sometimes an oversupply, because demand is low.
During the latter part of this cycle you will often hear people say that there is a “buyer’s market” in real estate, because it is obviously easier for buyers to negotiate a favourable deal when there are many homes on the market, and only a few people willing or able to buy.
On the other hand, says Berry Everitt, MD of the Chas Everitt International Property Group, the first phase of the cycle is usually termed a “seller’s market”, because an excess of demand over supply means the power is in the hands of sellers, making it easier for them to negotiate higher prices for their properties.
Property investments: manage yourself or use an agent?
When buying a residential property as an investment, buy-to-let investors are faced with the choice of managing the property by themselves or engaging the services of an estate agent.
PayProp CEO, Louw Liebenberg, says that while both choices have merit, each comes with relative risks and benefits.
“Investors sometimes underestimate the amount of time and skill required to successfully manage a rental property; from repairing fallen curtain rods to managing electricity usage and collecting rent, it’s a time-consuming, sometimes menial and often frustrating task,” says Liebenberg.
Liebenberg compares the differences between managing an investment property yourself and appointing an agent.