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Johannesburg – The residential property market is not only recovering, but showing an increased pace in price growth.
April was the first month in two years with double-digit house price inflation, according to First National Bank's (FNB's) Property Market Analytics. However, despite the rising prices, it remains more affordable to buy a home than it was a year-and-a half ago, said FNB property expert John Loos.
Loos said thanks to interest rate cuts of 5.5 percentage points since end-2008 and some wage inflation in 2009, buying a home has become much easier.
"Last year, house price deflation and ongoing wage inflation had the effect of making homes more affordable."
However, this won't last long as the real growth in house prices will end this trend, said Loos.
FNB's house price index reported an increase to 10.1% in April, from 8.1% in March. The average house price in the index was R790 087.
"It's still a relatively good buying time as there's still a lot of distressed selling," said Loos. "If your finances are in order, it's a good buying time."
However, Loos warned potential home owners need to take into account "new affordability" factors in owning a home. Electricity hikes, municipal rate increases and growing concern over the availability of clean water means owning large properties will become increasingly expensive.
This also suggests there will be greater demand for small houses than for electricity intensive homes with large gardens and swimming pools.
According to Absa's property index, small houses were the first category to show real growth (1.5% in February, after declining by 1.5% year-on-year in January).
"If you look at how the market has performed, it's not a bad time to invest, although the bottom of the cycle has already been reached last year," said Jacques du Toit, senior property analyst at Absa's home loan division.
According to Du Toit, house prices will continue to increase at a gradual pace as another interest rate cut is unlikely. "The interest rate will remain stable until 2011; the property sector shouldn't look for further relief from the Reserve Bank," said Du Toit.
Du Toit also said holiday house prices will lag the recovery in residential home growth.
- Fin24.com
April was the first month in two years with double-digit house price inflation, according to First National Bank's (FNB's) Property Market Analytics. However, despite the rising prices, it remains more affordable to buy a home than it was a year-and-a half ago, said FNB property expert John Loos.
Loos said thanks to interest rate cuts of 5.5 percentage points since end-2008 and some wage inflation in 2009, buying a home has become much easier.
"Last year, house price deflation and ongoing wage inflation had the effect of making homes more affordable."
However, this won't last long as the real growth in house prices will end this trend, said Loos.
FNB's house price index reported an increase to 10.1% in April, from 8.1% in March. The average house price in the index was R790 087.
"It's still a relatively good buying time as there's still a lot of distressed selling," said Loos. "If your finances are in order, it's a good buying time."
However, Loos warned potential home owners need to take into account "new affordability" factors in owning a home. Electricity hikes, municipal rate increases and growing concern over the availability of clean water means owning large properties will become increasingly expensive.
This also suggests there will be greater demand for small houses than for electricity intensive homes with large gardens and swimming pools.
According to Absa's property index, small houses were the first category to show real growth (1.5% in February, after declining by 1.5% year-on-year in January).
"If you look at how the market has performed, it's not a bad time to invest, although the bottom of the cycle has already been reached last year," said Jacques du Toit, senior property analyst at Absa's home loan division.
According to Du Toit, house prices will continue to increase at a gradual pace as another interest rate cut is unlikely. "The interest rate will remain stable until 2011; the property sector shouldn't look for further relief from the Reserve Bank," said Du Toit.
Du Toit also said holiday house prices will lag the recovery in residential home growth.
- Fin24.com
