Property developers to bend the knee to middle and low-income buyers
Articles about home loans / property in South Africa > Property developers to bend the knee to middle and low-income buyers
Low to middle income home buyers often ignored by developers in the mid 2000s boom period in terms of their housing needs are about to be given a fair hearing. In fact it’s likely that developers, at least the wiser ones, will be falling over themselves to meet the lower market segments every need, according to a prominent home loan expert who believes property related stakeholders can no longer ride on higher house prices to balance the books.
“Volume, not value,” was cited repeatedly by Marsha Haupt, national sales manager of mortgage originator Better Bond, as she urged home loan consultants at a recent convention in Johannesburg to increase their market activities. As the average household debt of 73 percent nudges its highest levels ever and upward pressure continues on interest rates, Haupt says the lower house price growth will be driven by affordability levels. Haupt strongly advises developers to keep a weather eye on oil price trends, domestic fuel and food prices and the rand exchange rate in their forward planning. All of which, she believes, will be strongly inter-woven in the house purchasing trends into the next year. Even so, Haupt is cautiously optimistic of a house price growth of around 13,1 percent (7,2 percent real) for the year over that of 2006.
Assuming developers will respond to the burning issue of affordability, either through building smaller units, lower price finishes and higher densities she sees this having a positive effect in stabilising selling prices in the second hand market. Her view is based on the current price differential between new and existing houses, which in the first quarter of this year was only 2,3 percent, or R21 800 more than an average size house. Far off the cry of the 31,1 percent, or R173 100 differential between new and existing recorded in the first quarter of 2003.
Given that the banks are still lending up to 108 percent on the purchase price of a new unit and transfer costs are included in the selling price Haupt says existing homes, unless representing good market value for money, could find themselves sitting. The situation could be further exacerbated by increases in second hand stock, which are already in over supply.
Published By: Rodney Hayter, September 5, 2007
Back to Private Sale Property in South Africa Articles