PROPERTY: More Renters Than Buyers
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Soula Proxenos, Managing Partner of International Housing Solutions (IHS) says when one takes a bird’s eye view of the affordable property market, a supply and demand mismatch is evident with levels of consumer interest hampered above the R3000 per month mark.
Small rental apartments for up to R2400 a month are being snapped up like hotcakes, but larger family units with two bedrooms or more at rentals from R3500 are testing affordability levels.
She says overall the demand for housing in the affordable property sector is huge, but access to finance and associated costs are driving consumers to rent rather than buy.
She says there is huge interest from potential buyers in inner city Johannesburg.
“Unit prices average R350 000 in downtown areas, but accessing end user finance is still a challenge for this market. Affordability becomes a problem for units priced above R450 000 and our research shows unit sales above R500 000 are very slow.”
She says defaults in rental payments are relatively low across the board and rental housing demand and rental inflation have not been negatively impacted despite the worldwide recession. But, unemployment and the fear
of unemployment was dampening the enthusiasm of both prospective buyers and mortgage financers.
“We remain very positive about South Africa. The 2010 FIFA World Cup exuberance and the worldwide recovery - which will hopefully be more apparent in the new year - is fuelling the bounce back in the overall property market.
“And although interest rates are at historic lows, only limited stock in the affordable price band is currently being constructed.
“Pent-up demand coupled with current low interest rate levels have made existing unit stocks more affordable and attractive, but the lack of new stock is driving up the price.”
The constraining factor all round remains that of end-user finance.
“Mortgage providers have made their credit criteria more exacting and have, until very recently, required large deposits from households that conventionally have little or no savings. In recent weeks the mortgage supply appears to have loosened up a bit, but it is still constrained.”
Business News Sector Tags: Property|