Property market continues its upward trend

The property market is on a roll. Ooba reports that property prices in April were up 5,6% on the same month last year and that April was the sixth consecutive month of positive year-on-year property price growth.

Some market watchers may be quick to point out that a year-on-year 5, 6% increase is not keeping up with inflation of around 6%. However, one should not lose sight of the fact that prices are rising, albeit slowly, and that economists are expecting inflation to drop so at some point the two should meet.

Important factors to keep in mind are that over 50% of the buyers were first time buyers and that ooba has report first time home buyers playing a significant role (between 47% and 50%) in the property market for several months. First time buyers have also been spending more on property for the 12 consecutive months to April when the year-on-year growth in their purchase price rose 8, 2% to R676 837. This is positive for the market and the country.

Another positive factor is the 27% increase in the ratio of bond applications declined by one lender that were approved by another lender. This translates into an effective approval ratio of 67% of all applications, which is the highest ratio of approvals ooba has recorded for over three years, according to this leading SA bond originator.

Overall the April oobarometer price index showed that the average house price rose to R870 070 from R823 483 a year earlier and the average deposit as a percentage of the purchase price was 14, 9% or around R129 319.

These positive factors show that there is return of confidence in the property market by buyers and bankers and this has translated not only into better approval rates but also higher loan amounts.

Property market cycles can be anywhere from four to 12 years, some say longer. As all the good news stacks up, it’s hard not to think that the market is on a sustainable upward trend.

Sought after Berea including Umbilo, Glenwood, Morningside and Windermere is one of many Durban suburbs where sales have risen exponentially. The result is that the market has stabilized at around 2006 price levels.

Here, there is a wide range of properties from the more affordable flats to the palatial. Prices for flats start from R350 000 upwards and prices for houses range from around R650 000 to the multi-million rands. While entry level properties are selling well there have also been many sales in the R2, 4 million to R3 million price brackets.

Because of its proximity to everything this is an area were people want to live. It is said that once people choose to live on the Berea they seldom want to leave. An analysis of recent sales shows that 41% of the buyers are buying in the same area. These people love the area and are upgrading within it.

There is currently a severe shortage of well priced property that offers the buyer value and a growing waiting list of clients. In an attempt to meet the need the Wakefields Berea branch is showcasing a selection of properties on show from 2pm to 4.30pm this Sunday. There are also many other well priced properties that can be viewed by appointment.

21 May 2012