Against a backdrop of sluggish economic growth, subdued income growth, rising municipal rates and utilities tariffs, and slightly higher CPI inflation which increased to 6.4 percent in August (2014) from 6.3 percent in July, today’s decision by the Monetary Policy Committee to keep the repo rate stable is good news, particularly for mortgage-dependent homeowners and aspirant home buyers requiring access to finance, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
“The recovery in South Africa’s housing sector has certainly seemed to gather some momentum and although house price growth remains relatively muted, the Pam Golding Property group has seen growth in the volume of transactions and therefore activity increase year on year by more than 20 percent for the second consecutive year. The rental market is also buoyant, adding further appeal for buy to let investors.
“House price trends continue to be driven by property market conditions and related factors which are impacted by a combination of macroeconomic factors, the state of household finances and the level of consumer confidence. Certainly historically low borrowing costs, despite the 75 basis point hike in the repo rate in 2014 to date, are buoying confidence in the housing market, with banks demonstrating a somewhat greater appetite for lending.
“There is now a shortage of stock in almost every primary market in South Africa, with plenty of buyers chasing that stock – particularly in high-demand areas such as metropolitan areas in major centres, and notwithstanding unforeseen external factors this should be the forerunner of real, above-inflation house price growth and hopefully a sustained up-cycle.
“Generally speaking, correctly priced properties are staying on the market for a much shorter time than in the recent past and in highly sought after areas these properties are being snapped up within a couple of weeks at the most, after going onto the market. Over the past year attendance at show days has increased considerably, with many instances of more than one offer being made on the same property.”
Dr Golding says a factor fuelling the demand for homes is the surge in the buying power of black buyers, which has increased exponentially in South Africa, and continues to do so. “These buyers are investing in their own homes and purchasing property across all sectors of the market and in all areas around the country. As with all home buyers, purchases are made for a variety of reasons, including gaining that first foothold into the market, acquiring a second home for leisure or investment, finding that ideal family home or even purchasing an iconic luxury property – perhaps in the country.”