Affordability: developers need to take heed

Affordability holds the key to the future health of the South African housing market – and developers should take heed of this fact.
Commenting on FNB predictions that house price growth is likely to slow to single digits later this year, Martin Schultheiss, CEO of the Harcourts Africa property group, says it is clear that lack of affordability is currently a major obstacle to sustained demand in the housing sector.
“And without growing demand, price growth will decline,” he says. “Ours is a market where the greatest need is in the essential buying category, that is, people need an affordable roof over their heads, as opposed to leisure or speculative buying.
“And it is not only essential that greater volumes of affordable units are brought to market for prospective owner-buyers, but also for the affordable rental market, where better stock levels will spur greater investment.”
He says the household sector remains under pressure, with the latest figures showing the ratio of debt to disposable income still at nearly 80%. And while this paints a rather bleak picture for prospective homeowners, especially at the lowest end of the market, it also means that they will be looking for affordable rental homes if they cannot muster the finances to buy their own.
“Developers would do well to take note of this need and adapt development plans to cater for this sector. Although affordability is a common denominator, property investors are also looking for additional features - and developers who want to tap into this market should take heed.
“For instance, investors want compact properties with easy access and hard-wearing surfaces for easy maintenance. Tenants typically occupy units for an average of two years and landlords are keen to keep refurbishment costs to a minimum at the end of a lease period. Therefore, tiled floors are preferred to carpets, for example.
“Investors may also show a preference for built-in appliances and other facilities, such as pre-paid meters for electricity. And of course affordable units with low maintenance requirements would find favour among owner-buyers too.”

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