As anticipated by many market commentators, against the backdrop of a still fragile economy and despite rising inflation, the Monetary Policy Committee today (19 September 2013) took the welcome decision to announce that the repo rate would again remain stable, says Dr Andrew Golding, CE of the Pam Golding Property group.
“From a Pam Golding Properties (PGP) perspective, our view is that while the housing market continues to show signs of gradual recovery, underpinned by positive sentiment among home buyers, the fact is there are a number of factors impacting on the residential property market, including access to finance.
“Although the economic recession caused house sales to slow and as a result less new homes to be built during that time, this has now created pent-up demand for homes and we are seeing an increasing take-up of available stock – both in terms of new and existing homes. An increasing trend is that in a number of high demand areas in all the major metropolitan areas of the country (across various price ranges, particularly up to R2 million or R3 million), stock shortages are being experienced. This trend is not necessarily across the board in every area but is being fuelled by desirability of location, access to schools, the workplace and a convenient and appealing way of life. In addition, buyers remain discerning and consider their options until the right property becomes available at the right price, resulting in a market which also remains very value-conscious.
“Other factors that are impacting on the current market include the fact that, as always, the housing market is very much driven by sentiment. Furthermore, mortgage funding continues to be less accessible than previously and even with interest rates at historical lows, the market has not responded as it would have in the past. Buyers need substantial deposits and are staying in their properties for longer periods of time in order to accumulate equity in their current bonds before looking to relocate – and they need to invest more of their own money in property. Having said that South Africans are gradually becoming accustomed to the new market conditions and new way of purchasing property, which augurs well for a sustained, steady, albeit slow recovery.
Concludes Dr Golding: “We remain optimistic regarding the remainder of 2013 and expect that interest rates will remain stable during this period. Nationally and as a group, PGP continues to achieve growth in sales across all regions, as well as in other countries in Africa.”