Property News & Information

SA property market over the next 6 months - comments on our poll

... and why shouldn't our first poll start with the biggest question of all ?

If the question "What do you think will happen to residential property prices over the next 6 months ?" is pretty straightforward, then the answer is anything but. At the moment, the market is in an interesting state of flux after the recent boom and before the anticipated 2010 surge. Against many expectation's property prices have continued to rise albeit not quite at the rates of the previous few years. There are so many factors at play at the moment and making predictions for the rest of 2007 is a tricky business. We did some digging and found out what the experts had to say - click to see the ABSA, FNB and Standard Bank recent reports.

Some of the influencing factors we found:

• Amount of residential property stock/development coming onto the market (decrease)
  
• Inflation rate (increase)
  
• Building costs (increasing and at a faster rate than housing prices)
  
• Possibility of further interest rate hikes (likely)
  
• Impact of pending legislation like the social housing bill and the National Credit Act (comes into effect on 1 June). Also local/municipal development guidelines may be becoming more stringent
  
• Strong employment stats and a generally healthy macro economy
• Availability of land for development (decrease)
  
• Overall affordability of residential property. Are houses just becoming too expensive - see the M&G article - "Average house cost R911 800 in April" ?
  
• High personal/household debt levels. An alarming stat from ABSA 'The ratio of mortgage repayments to remuneration
  increased further in the third quarter of last year to its highest level since the first quarter of 1992.'
  

ABSA forecasts a price growth on 7,2% (after inflation) for 2007 compared with 10,2% in 2006. It is interesting to note that this is definitely not consistent across price bands or regions - there is more optimism around growth in the lower-middle market segment than the upper. Luxury coastal home prices in particular seem to be slowing. Standard Bank's prognosis is that "While very little, if any, growth in house prices is expected in the near term, the prospects further down the line remain solid". FNB's 1st quarter residential barometer is at the highest level in nearly 2 years (the barometer determines the market sentiment/confidence of 150 leading property professionals).

So the overall outlook seems fair, but does the property buyer feel he/she is making the right decision by investing in housing at the moment ? This survey is intended to get a feeling for the market sentiment, let's see what it comes up with ...

Posted at 01:06PM May 17, 2007 by Grant in Surveys  |  Comments[3]