Now is the right time to invest in South African residential property

While it is undeniable that year-on-year growth in the housing market did slow down fractionally from April 2013 and that consumer confidence hit a new low in the fourth quarter of last year (-7 on the scale), those commentators on the residential property market who in recent months have been saying that from here on the market will improve, albeit slowly, are almost certainly correct.

This is the view of Mike van Alphen, National Manager of Rawson Finance, the Rawson Property Group’s bond origination division. Speaking to staff last week, van Alphen said that at least three factors give reasons for optimism.

“The first,” he said, “is that, although it was down by 1% to 2% since April of last year, nominal house price growth, according to the latest Absa figures, now stands at around 9%, with the real price growth (i.e. allowing for inflation) at about 4%. What the investor/potential house buyer has to realise is the massive (± 20%) improvement in nominal terms, since the bottom of the graph was hit in early 2009, puts today’s figures on a par with the bullish figures of 2010 and signals a huge turnaround. Many housing sectors elsewhere in the world would be extremely grateful to have growth figures of this magnitude.”

A second reason for confidence, said van Alphen, is that growth in household credit balances has been contained in recent months – to 2,5% year-on-year. 

“This indicates that South Africans are at last coming to terms with today’s tough economic conditions and are once again focusing on priorities such as housing rather than the consumer goods which caused retail sales to rise so dramatically during the last year. Although mortgage borrowing is unlikely to see a big upturn this year, they will almost certainly from now on continue at a satisfactory rate. “This,” van Alphen added, “is reflected in Rawson Finance’s turnover figures, which, like other bond origination divisions, have seen a 35% increase year-on-year.”

A third and very obvious reason for optimism and for advising people to get into property now, said van Alphen, is that interest rates continue to run at the all-time lows. What is more, he said, they are unlikely to rise by more than 0,5% in the last quarter of 2014 or early 2015.

“Our bond originators regularly tell our clients that with the average long term bond being granted today at 9,5% interest, there can be no better time to buy property – especially when it is appreciated that the short term interest on consumer goods is often twice that charged on long term mortgage bonds,” said van Alphen.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us