Commenting on the reduction in the interest rate by the South Africa Reserve Bank, Dr Andrew Golding, CEO of Pam Golding Properties, notes that this is welcome news, providing a confidence boost to the economy as well as the property market. Although inflation is lower, consumers continue to feel the pressure of high and ever-increasing electricity costs - high fuel prices and increasing property rates.
Although banks have eased their lending criteria to some extent, the aspirant home buyers, including those wishing to relocate, are generally having to secure not only the costs associated with home ownership, such as transfer duty, bond costs and the like, in many instances they also need to be able to put down a deposit of around 10%.
Although interest rates are historically low, the days of many homebuyers being able to achieve mortgages at below prime rate are seemingly over, which adds to the burden on consumers to have good cash flows from an affordability perspective.
"We believe this further reduction in the interest rate will have a positive impact on the property market by providing a confidence boost in terms of sentiment, with cost savings, albeit modest, gradually filtering through into the market. We need to encourage home ownership as a means of financial security for the future and first time buyers are also faced with having to contend with all the other 'new' costs of owning and maintaining a home on a daily basis. As a result, the reduction in the interest rate will be beneficial to this sector of the market in particular."
Nodes of development
From a company perspective we are seeing a gradual increase in activity and enquiries, with the most activity in the price range up to around R3 million and R4 million. The top end of the market has picked up, particularly in the price range from R12 million upwards, with this sector of the market also seeking good value. While major metropolitan areas such as Johannesburg - particularly northern suburbs and Cape Town - including the Atlantic seaboard and southern suburbs - remain areas of consistent activity in the residential property market, there are signs of slow improvement based on well-priced offerings coupled with appealing lifestyle noted in other regions and areas. These include the Garden Route, Kenton-on-Sea and Grahamstown.
Although most buyers are seeking to acquire homes for primary residence, there are pockets of growing interest in the leisure homes market, with many well-located properties along South Africa's traditional holiday coastline as well as inland offering excellent value at their current prices.
Following the collapse of the holiday home frenzy in the boom days, we are now seeing renewed interest in land, and Jeffrey's Bay and St Francis have seen significant increase in land sales for building leisure homes.
The North Coast of KwaZulu-Natal, around Ballito, has seen an upturn with the greatest demand for homes on, or close to, the beachfront. Interestingly, on the KwaZulu-Natal south coast, the areas south of Amanzimtoti, such as Pennington and Scottburgh, are showing a shift in buying pattern with about 50% of the interest in primary homes within a commuting distance of Durban and the balance in second homes. Inland recreational centres such as Underberg in the Drakensberg, Clarens in the Maluti mountains and Dullstroom in the highlands of Mpumalanga have all shown a recovery of the leisure market in the past year. These are primarily areas within a reasonable drive for a weekend away from Gauteng. In addition, leisure property in the Vaal Dam area has picked up considerably.