Strong growth in the residential building sector over the next 12 months can mean that that home affordability could also increase.
We see building cranes all over Cape Town, in all suburbs, and according to a few property strategists, the square meterage of residential building plans passed showed year-on-year growth of 19,2% in the third quarter of last year. The square meterage of residential building completions is expected to surge this year by 21,6%.
The result of this is a substantial amount of new stock coming to the market which in turn will help to meet the huge demand that has been pent-up over the past few years, and thus keep house prices from rising too fast.
Meanwhile, we believe that falling food and fuel prices â€“ and decreasing inflation â€“ will improve the financial situation of many households in the coming 12 months and that this will also help to make property more affordable for many, even if the Reserve Bank continues to raise interest rates and salary increases are not stellar. Of course, some areas are still likely to see the bidding wars, cash purchasing and huge asking prices we have seen emerge in recent months, but many more will soon have enough affordable stock available to enable ordinary families to get back into the market in a meaningful way.
What is more, as prices stabilise, we expect a lot more sellers to moderate their own expectations instead of holding out for unrealistic prices, and that this will give the market even more momentum. And finally, we think it is going to get a little easier to obtain home loan approvals. By no means are we expecting the mortgage free-for-all of the last real estate boom, but we do think that the banks will look more kindly now on those who have taken the trouble to clean up their credit issues over the past few years, and that deposit percentages could well decline.
So watch this space for new properties or contact our agents for details.
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