The road ahead for the real estate market

Housing demand still exceeds supply in most parts of SA and this situation is not expected to change for the rest of this year, despite the possibility of a further small rate rise.

That’s the word from Richard Gray, CEO of Harcourts Real Estate, who says, however, that the rate of house price growth is expected to moderate from the 8% to 9% achieved last year to around 6% in 2015, thanks to the negative effect that rising interest rates have on affordability.

“Having said that, though, the Reserve Bank has been saying for some time that it planned to start ‘normalising’ interest rates this year, and the anticipated effects have to some extent already been discounted by the market.

“July’s 25 percentage point increase, for example, will add only R162 a month to the repayment on a R1-million bond, and with so many buyers being so much better informed and better prepared now that they were a few years ago, they will counter that type of increase simply by buying a slightly less expensive property – or by paying a slightly bigger deposit.

“Serious sellers, on the other hand, are already showing more understanding of the buyer’s position and more willingness to negotiate.” 

In addition, he says, the banks currently have a strong appetite to lend and to compete for new home loan business. “So the overall picture is one of realistic sellers, consumers who have worked hard to be able to qualify for home loans by saving and reducing their debts, and banks who are keen to lend them money.

“Together with the slowing rate of new housing delivery, this will, we believe, underpin the market for the remainder of this year and well into in 2016, making this an excellent time to sell. As it is, our offices around the country are reporting that offers are still coming in quickly on well-priced properties.”

Turning to Harcourts specifically, Gray notes that following a 29% growth in sales volume in 2014, the group is currently tracking 20% growth for this year – which compares extremely well with the market average of 5% as calculated by property data company Lightstone.

“This speaks once again to the high calibre of our agency owners, principals and agents, and to our ability to keep attracting entrepreneurs and top-performing agents who always go the extra mile for our customers and consequently always achieve extraordinary results.”

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