A positive yet challenging property market

Lightstone reported that the national annual property price inflation was up 7,06%, lifted by higher property prices in the minor provinces such as the Free State, Northern Cape, Mpumalanga and Limpopo.

Ooba, South Africa’s biggest bond originator, said its October average approved bond of R795,993 was up 7.8%, year on year, while the effective bond approval rate (the overall percentage of loans approved once ooba had shopped the loan to multiple banks) was up 2%, year on year, at 65.4%.

Buyers were also becoming used to the idea that banks require a deposit, with the average deposit paid rising 9.6% year on year and amounting to 14.9% of the purchase price.

First time home buyers continued to dominate the market making up at 52.1% of ooba’s October bond applications. They also spent 9,6% more, year on year, on their property purchases.

This ongoing good news has had the effect of creating what seems currently to be a tug-of-war between buyers and sellers.

“For some time now it has been a buyers’ market and we are seeing sellers trying to claim back the market,” says Myles Wakefield, CEO Wakefields Real Estate.

“I get the feeling that Durban sellers are sensing that the market is improving. They get this from the flyers estate agents put in their postboxes and, from friends who have put their properties on the market and sold quickly. So the word is getting out that things are improving.

“This has led to agents taking mandates at elevated prices and then finding that buyers are digging in their heels and refusing to pay prices that they feel are higher than justified,” he said.

The question in the months ahead is what is going to happen to sales volumes that have been inching up over the past couple of years, said Wakefield.

Describing the current property market as fairly neutral Wakefield said that barring external good or bad news it would, in his opinion, continue bumbling along with pockets of good performance.

Looking at the 12 months ahead Wakefield said the market faced some challenges considering that economic growth was low and 2014 was an election year. What the market needed was a catalyst.

In favour of the market was a large pool of qualified buyers; a stable prime interest rate of 8.5%; business confidence tipping towards positive and government’s massive infrastructure development drive, to create employment, among other things.