|Steady middle-market activity is likely to ensure double-digit house price growth in Bloemfontein’s property market for the remainder of 2006 – in spite of the early June 50 basis point hike in interest rates. |
The expressions of market confidence comes from Jan Briedenhann, co-principal of Duvenhage en Briedenhann who was commenting on real estate trends in the Free State’s capital city. Briedenhann is also a director of referral group National Referral Network (NRN),
Briedenhann says the market was now visibly affected by the marked differential between salary growth and property price increases over the last five years. “During this period, while salaries only increased by seven to eight percent year-on-year, house prices grew by a staggering 18 to 32 percent. The result is that the market is now firmly driven by affordability.”
The market had accordingly slowed in the R1 million plus price range, with activity predominantly between R600 000 and R900 000. These purchasers were tending to find more value for money in older suburbs such as Gardenia Park, Bayswater and Hospitaal Park, where house prices started at around R550 000. Ever-popular Langenhoven Park, however, with its rural atmosphere and relatively low crime levels, continued to record high take-up levels of young buyers, most of whom were moving between townhouses.
He said further that emergent market buyers were becoming an increasingly dominant force in the middle sector, relocating steadily from traditional township areas to the suburbs as their affordability levels grew.
At the top end of the market, Briedenhann is expecting single digit growth for the remainder of the year, even though homes in this price range very often offered the best value in terms of rands per square metre. Owing to strong interest in the new Woodlands Hills Wildlife Estate, there had been an unnatural offloading of highly priced stock in areas such as Heuwilsig, where homeowners were selling up and moving to the development, he added.
And despite past fears that there would be a surfeit of townhouses in the Bloemfontein market as a result of intense new residential development during 2004 and 2005, demand remained strong for units in most price ranges. This demand was being balanced by stock level increases, the result of a healthy ratio of disinvestments, which was compensating for the current lack of new development in the wake of a dearth of building land.
Sensitive to market changes and a continuing price push, NRN member Pat Acutt, chairman of Acutts Real Estate, said the recent rate increase had had no effect on movement in the lower price range.
“The rate increase did what we believe the Minister intended it to do, namely act as a gentle wake-up call to curb excessive credit spending. It has had very little effect on the property market, except perhaps to remind people to allow enough leeway in their budgets to be able to absorb rate increases of a few percentage points. The message is clear for those who choose to listen: never buy to your maximum credit capability when interest rates are low, which is sound consumer advice.”