The latest economic data on debt levels in SA indicate that the property market is set to stabilise further, says Tony Clarke, Managing Director of Rawson Properties.
Clarke said that recent data has shown that the number of South Africans in arrears with their various repayments is increasing markedly. 'The number is the highest on record in the past four years. According to economists, we are only now seeing the full effect of the first interest rate hikes last year. We could, therefore, only see the full impact of the latest rises in the second quarter of 2008'
Clarke added that another rate hike in October is very likely, as the inflation rate as yet shows no sign of stabilising. This statement confirms Clarkes sentiments in previous releases that the average South African consumer is finding it increasingly difficult to keep up with the rising costs of fuel, food and interest rates.
'The impact of these price rises is most visible at the lower end of the market. Here property buyers are finding it increasingly difficult to qualify for their first home loan. Existing property owners are finding that upgrading has also now become impossible, as they no longer qualify for the larger loans necessary to afford bigger homes. At the moment we find that there are far fewer buyers interested in any particular property than previously and we are noticing a drop in show house attendance'
The stabilising trend is confirmed by the latest results from the financial institutions, says Clarke. 'The price of property in South Africa is determined by what buyers can afford. As soon as property becomes out of reach for the average South African, prices start stabilising'
According to the latest Standard Bank figures, year-on-year median house price growth in August was only 5,7%, compared to 10,4% in July. The ABSA House Price Index, records a nominal year-on-year growth of 14,6% in August, compared to 15,1% in July. (ABSAs figures are based on the total purchase price of houses in the 80m² to 400m² category with a selling price of less than R2,7 million while Standard Banks prices are calculated on a figure above which half the houses sold are more and half less expensive.).
'This clearly shows that we are now experiencing a buyers market in South Africa,' said Clarke. 'However, sellers who are repurchasing elsewhere should not be too concerned about putting their house on the market because they will get a good deal when they buy their next property '“ the buyers market will work to their advantage'
Sellers in this competitive market, said Clarke, should put in effort to ensure that their property is in a good condition when they decide to sell. 'Buyers will be comparing your property to others in the area, so it is vital to make sure that they are not put off by repairs and maintenance still needing to be done'
Clarke added that despite the tougher conditions now facing South African property buyers, we will definitely not see a decline in property prices. 'The market has been stabilising for some time, but nationally house price growth will continue at double digit figures'
