Positive Outlook on the South African Property Market

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) October 20, 2011 -- At a time when so many of South Africa's spokespeople for the residential property marketing sector are predicting another year of price growth well below the current inflation rate, some encouragement helps.

Lanice Steward of Anne Porter Knight Frank estate agency has identified several positive aspects. All of these, said Steward, point to the downturn having now bottomed out and prospects for residential property looking a great deal rosier compared to the last 12 to 18 months.

The 'positive' signs to which Steward was referring are certain figures from Statistics S A which the ABSA Home Loans newsletter quoted in its end of September publication.

These figures, said Steward, show that planning of new housing improved 'markedly' in the first seven months of 2011, all three ABSA housing categories (small, medium and flats/townhouses) showing year-on-year growth.

"The star performer here was, of course, flats and townhouses where approved plans rose by 42% in the January to July period. The average number increase for all three sectors was 15,9%."

Also encouraging, said Steward, are the figures for buildings completed in the same period. Here there was a rise 3,3%, the biggest increase being in houses under 80 m2 in size.

"With larger numbers of plans now approved, the flats and townhouses figure in particular will almost certainly be far more positive in the coming six months," said Steward.

The Western Cape (APKF's operating territory), added Steward, had once again outperformed other South African provinces.

"Building plan approvals here rose year-on-year by 16,3% and comprised 25% of the total, even though the province's population is only 17% of the total. Gauteng, with 64% of South Africa's population, could only notch up 37,4% of plans approved."

Steward also drew attention to the latest figures from ooba, the bond origination company. The oobarometer for September reported that average house prices rose 0,6% year-on-year (to R829,899). Particularly impressive, she said, is the increase in the average purchase price of first time homebuyers, which rose 9,2% to R619,139.

"Ooba's Chief Executive, Saul Geffen, said that the purchase price by first time homebuyers has now risen each month for four consecutive months. This is bound to have a push-up effect on the market as a whole."

Ooba had also, said Steward, reported fairly good bond approval rates, with only 46,1% of applications nationwide being turned down. The effective approval rate has year-on-year, therefore, improved to just over 64%.

"The lesson to be learned here," said Steward, "is that one in five initially rejected bond applications would have remained declined had they not been shopped around to alternative lenders. It is, therefore, very important to try more than one bank."

Further good news for the housing sector, said Steward, is that there has been a marked increase in the loan to value figures.

"We have seen a big upswing in the award of 95% and 100% bonds. More salaried employed people are now qualifying for 95% bonds than we have seen for at least two years, while ABSA's upper limit for self-employed people deemed to have a good credit record has now risen to 95%."

Although it is still difficult for self-employed people to obtain bonds, said Steward, this situation is definitely improving.

Steward remains a proponent of the ten year cycle theory in property. Applying this to the Western Cape's home sales, she is, she said, confident that by the end of 2012 a slow recovery in the global economy, stock shortages and further easing of bank loan conditions will bring about a rise in Western Cape house prices which, she believes, will become evident countrywide towards the end of 2014.

BestBidOnline gives credit to The Property Mag

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