Real estate set for solid gains in 2015

The residential property market is fairly well-balanced at the moment and prices can be expected to rise by an inflation-beating 8 to 9% in the next 12 months – except in gated estates and certain “hot pockets”, where they are likely to increase even more.
That’s the opinion of Lew Geffen, chairman of Sotheby’s International Realty in SA, who says the latest decision by the Reserve Bank to leave interest rates unchanged, combined with lower fuel and food prices, will obviously boost consumer sentiment and the demand for residential property going into the new year.
“However, the economy is still weak and over the next 18 to 24 months, we foresee that interest rates will have to move somewhat off the current low levels to attract investment and create employment – and while that will probably not do much to slow housing demand, it will affect housing affordability.
“Consequently, we expect that while the banks will be keen to approve home loans, they will maintain their strict credit criteria and keep a tight rein on property valuations, thereby helping to prevent the market from overheating in the face of the current shortage of supply.”
Meanwhile, he says, the latest building plan statistics show that developers can be expected to start bringing more new projects on stream early next year and that this trend is likely to gather steam fast, so that by 2016 the stock shortage will be alleviated and buyers will have a greater choice of homes to buy.
At the moment, however, the market remains favourable for sellers, although this does not mean that they should be tempted to raise their asking prices to levels that are inconsistent with the market value of their homes. “As mentioned, the banks are still cautious when it comes to property valuations, and in addition to that, today’s buyers are generally well-informed and very value conscious.
“Well-priced properties, on the other hand, are moving very quickly because of the supply shortage, and there is thus an excellent opportunity now for existing owners to sell and move on to their next home.”
Geffen says the fact that interest rates are still low makes it an especially good time to upgrade to a bigger home or a better area, especially if you have equity in your current home that you will be able to use as a deposit on the new property and so reduce the size of the home loan you require.
“Having said that, however, this is no time for prospective buyers to be sitting on the fence and waiting for prices to go down as development activity picks up and supply increases. Firstly, steady increases over the past few years have now put prices back where they were prior to the 2008/ 09 crash, and they are set to stay on an upward course.And secondly, ever-rising building input costs mean that the prices of new homes will always be higher than those of equivalent pre-owned homes.
“These considerations, plus the expected small interest rate increases over the next couple of years, will make it increasingly difficult for buyers to qualify for home loans, so they should seek out well-priced properties and decide on a purchase as soon as possible.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
    • 17 Apr 2018
      The recent interest rate cut has stoked the coals in the first-time buyer’s market. At least for the next two months until the next interest rate announcement, homeowners are guaranteed lower monthly instalments than in the previous quarter. But, is it wise to take out a 100% bond just to enter the property market while interest rates are low?
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us