'Double digit' property increases predicted
Property experts are seeing the light after a few tough years in the residential property market, with some predicting "double digit" increases this year.
Seeff chairman Samuel Seeff said yesterday coming off five years of low growth on the back of tight economic conditions, 2014 saw the property market emerge from one of the toughest down-cycles.
The market was on solid ground, with a good balance between demand and supply, and an increase in the demand side, which favoured sellers. For 2015, sellers should expect the buoyancy to continue, with plenty of buyers and good prices, said Seeff.
It may mean that prices could be going up for consumers looking to buy, but Seeff said the average price growth rate, at around 8 percent, was still significantly lower than what it was during the boom years - making homes still quite affordable.
FNB property sector strategist John Loos said the strengthening of the property market was especially evident in townships. "Property in townships is more affordable and the low interest rate benefits first-time buyers looking to buy there. Currently they make up 25 percent of buyers, compared to the 12 percent population of first-time home buyers during the recession period," he said.
One of the main contributing factors was the spike in demand for houses. Tony Clarke, managing director of the Rawson Property Group, said this was because South Africa still had one of the biggest emerging middle classes in the world, creating a high demand for housing.
Seeff agreed that there were significant stock shortages in many areas, which meant serious buyers had less to choose from, and if they did find homes at a good price, they should put in an offer as soon as possible.
But Clarke said he believed solid positive sentiment in property would assist in combating the housing shortage by spurring on new development. "Property is expected to increase in double digits this year."
Loos said banks were more cautious when it came to the lending criteria for home loans than they were during the 2006 boom, but more relaxed than in 2008 and 2009.
Steven Barker, Standard Bank's head of home loans, said it had become easier for first-time buyers to secure a bank home loan in recent years. "Property has become more accessible to this market because of the expected increase in real disposable income."