Demand will rise much faster than prices, says Everitt

In real estate terms, 2014 should see the market continuing to strengthen and build on the gains of the past two years, with stock shortages growing and homes selling much more quickly in response to rapidly increasing demand.
“In spite of the sluggish economy and declining consumer confidence, every month sees more prospective buyers streaming into the market,” says Berry Everitt, MD of the Chas Everitt International property group, “and we expect this trend to continue into 2014.
“SA’s population is growing and there is also massive pent-up demand because of the slow rate of new housing development from 2009 until late last year, as well as the tight credit controls exercised by the banks for the past five years.
“There is also a strong sense that the current very low interest rates will not last more than another year, and that prices will start to increase more rapidly as stock shortages grow even more acute, especially in the most popular suburbs of the big cities and metros.”
In addition, he says, many of those who are keen to buy now are still not in a position to qualify for a home loan and will have to continue to rent until they can reduce their debt load or perhaps save a deposit–and that, in turn, is encouraging buy-to-let investors to add further properties to their portfolios.”
“Consequently, we expect to see the overall number of sales continue to climb in 2014, facilitated by an increased appetite on the part of the banks for long-term lending such as home loans.”
However, Everitt says, while it is true that the banks are granting more home loans at the moment than at any time in the past five years, this should not be read as an indication that they have relaxed their lending criteria. “Rather, it is just a reflection of the fact that there are now more prospective borrowers for them to choose from.
“In addition, they are still very conservative in their valuations of the properties for home loan purposes, so we do not expect to see much upward movement in house prices despite all the additional activity in the market.
“Our expectation is that values will grow by around 10% this year in the most sought-after areas, and less in areas where there is less demand and / or no stock shortage as yet. Revenue growth, which has been very strong for the past two years, will thus continue to come mostly from increased volumes of sales.”

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