Stability in residential property market
A young new generation of South African home buyers appear to be entering the market with distinct goals and expectations in the face of rising maintenance and fuel costs. But, no one is giving up on buying property as demand continues to increase against the backdrop of a stable repo rate.
Owners of property in Pinetown and Durban as a whole breathed a collective sigh of relief at the announcement on May 24th that the repo rate would not be adjusted. This after the Monetary Policy Committee determined to keep real estate market waves to a minimum after the VAT increase earlier this year.
Middle income South Africans have already begun to notice the tremendous knock-on effect that a seemingly tiny 1% increase to VAT can make as they take repeated hits to their wallet over everything from alarming petrol increases to a walloping in the grocery store. “Positively however, growth prospects for the housing market are definitely improving, so there is some upside on the horizon, but what we need now from the Reserve Bank is a steady hand in regard to the repo rate.” Says Dr Andrew Golding, chief executive of the Pam Golding Property group.
“Currently and in regard to Pam Golding Properties’ sales the residential property market is stable, with the strongest demand in the lower to middle market segments to around R5 million, with credit lending a positive contributor to market activity.” He added. Despite the stain of the underwhelming economy there appears to be no decline in the number of people seeking to purchase property, in fact, demand continues to outstrip supply.
Perhaps the most interesting development is the dramatic increase in popularity of sectional titles, seen as a solution to high maintenance costs and increased security concerns associated with larger properties. Necessity is the mother of invention and South Africans appear to be finding all manner of solutions in the face of rising commuting costs and utility bills. In the 1980’s, development of sectional title properties accounted for around 5% of total development. Demand, however, has increased to the point that over 25% of all new developments are for sectional titles.
