Grab That Bargain
Category Property Advice
The banks expects the South African Reserve Bank policy tightening to commence in the second quarter of 2013.
This was revealed in the Standard Bank Property Insight report that indicates that the residential property market would be prudent not to expect any stimulus from monetary authorities via the lowering of interest rates in 2012.
The Standard Bank’s median house price contracted by -0.4 percent year-on-year (y/y) in December from a growth rate of -1.0 percent y/y in November.
Sibusiso Gumbi, Standard Bank property research analyst says consumer purchasing power is forecast to remain under pressure in 2012, with inflation expected to average 6.2 percent in 2012.
“A continued moderation in credit uptake, uncertain labour prospects, and subdued consumer confidence are likely to peg property price growth in the low single digits over the course of 2012.”
Current price growth is appropriate to the economy especially when issues such as disposable income, affordability and bank lending are taken into account.
If property prices were to grow beyond current inflation, it may well reduce demand below the current levels based on affordability.
Banks continue to report soft demand in the market, but these are general statements and do not necessarily reflect the market as a whole.
Coastal leisure markets are under pressure and will remain so for some time as supply significantly exceeds demand whereas in the metro areas, there is still demand for homes priced up to R3.5 million, albeit slow.
It is to be noted that banks are quick to lend on cars, personal loans and credit cards and this rate is seemingly increasing at a much faster rate than mortgage financing.
It would appear to be easier to get an unsecured loan than a mortgage loan secured by bricks and mortar.
Home ownership forms the backbone of communities and families on both aspirational and social levels buy yields do not take this into account.
First time buyers will support the overall recovery of the market from a demand and then price point of view. The recovery has to be ‘bottom up’ for it to be sustainable.
Even if property prices increase by only two to three percent per year over the next few years, the owner would have built up some equity - it may be small, but it’s a start.
First time buyers will support the overall recovery of the market from a demand and then price point of view. The recovery has to be ‘bottom up’ for it to be sustainable.
Buyers must do their homework and make sure they buy at prices that reflect the current market.
While there are no real bargains, this is definitely not the market to overpay for a home.
For sellers, it’s about understanding the market and pricing the property accordingly. Homes are not taking four months to sell, sellers are taking that long to finally realise what the market is prepared to pay for their home.
Every seller’s home is their castle but unfortunately the emotional value that owner’s place on their homes does not always equate to financial value.
Patience will be a key factor in terms of a recovery in the economy and similarly in the residential market and property prices will inevitably start to move, but it’s a matter of when.
Property prices at current levels and interest rates at historically low levels, the decision to buy now, with a long term view, is sound.
Buying in a down market can be one of the smartest moves, but bargain deals won’t last.
By waiting for prices and interest rates to decline further, buyers risk getting caught up in a market on the upswing.
Property prices are at the lowest levels in years and buyers are unlikely to get a better deal than what is on offer in the market right now.
Those looking to sell this year will need to price conservatively and those not in a hurry to sell are best advised to wait at least a year to eighteen months.
Given that properties are now taking on average of between four and six months to sell, motivated sellers are quite willing to negotiate and buyers have a real opportunity to buy smart.
Home ownership is still seen as a comparably safe way of investing money and property offers relative stability with the underlying potential of capital growth.
Historically, house prices have escalated around 15 to 20 percent per annum between 2000 and 2007.
According to the Absa House Price Index, this peaked in 2004 at an average of 32.2 percent.
In the two years leading up to the global housing market crisis of 2007, average house prices rose by 14.95 percent.
Following the crisis, there has naturally been a significant adjustment with average prices now at levels last seen about four years ago.
He adds that those looking to sell this year will need to price conservatively and those not in a hurry to sell are best advised to wait at least a year to eighteen months.
