Some idea of just how good (from the buyers viewpoint) the current values of South African housing are, can be gained from ABSA Banks data which were recently explained by Sean McCauley, a Director of Rawson Properties, to certain of his colleagues in the Johannesburg operation.
McCauley showed that used ('secondhand') housing is now 13,9% less expensive on average than new homes coming onto the market from builders and developers. The prices of new homes, he said, are currently still, at least in part, resistant to the downturn.
In November they rose 18,1% year-on-year, giving an average price countrywide of R1,1 million for new homes.
By contrast, the average price of a secondhand house was R954,000. (If these figures seem high, it should be realised that ABSAs figures do not take in the full spectrum of township housing.)
Land prices, said McCauley, had also resisted the downward trend and in fact rose by 17% year-on-year. The reasons for this, he said, could be partly that there is now less fear of electricity outages and therefore ongoing development will once again become feasible and, secondly, that there is now a land shortage.
Housing prices, added McCauley, have risen this year, despite the negative comments from the press, albeit it not in many cases in line with inflation: they were 3,9% up year-on-year in November, with the upper bracket homes, i.e. those with an average price of R4,6 million, showing a remarkable 10,4% increase. Western Cape house values fared better than those of Gauteng, he added.
Developers, said McCauley, will still be able to launch selected, possibly smaller, projects because they are still given preferential treatment by the big lending institutions. Buyers here, he said, are in the strong position of being able to get 100% bonds - and these buyers pay no VAT or transfer duty.
Some bond applicants, said McCauley, are fortunate because they still qualify for bonds, but this is no longer the norm, and one bank is in fact threatening to limit their loans to 70% except in exceptional circumstances.
