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A further reduction in the repo rate would have not only served to some extent to help alleviate pressures on consumers who are feeling the effects of rising fuel, food, electricity and rates tariffs, it would also have provided a confidence boost for South African consumers.
This was the view of Dr Andrew Golding, CE of the Pam Golding Property group, who said there were several factors at play, which were impacting on the property market at present, not the least of which being general market sentiment, and the stricter bank lending criteria.
“Banks’ risk assessment remains a critical factor in regard to buyer access to mortgage finance – in particular, self-employed applicants for loans are still experiencing intense scrutiny by lending institutions. A spin-off of this, however, is to further fuel rental demand among such buyers,” he said.
:We are also seeing that compared to two years ago, while there has been an appreciable decline in the number of distressed properties entering the market, distressed sales continue to form part of the property market and will continue to do so as assisting the distressed seller is a key strategy for the various banks in their rehabilitation/asset disposals,” said Golding.
“The majority of distressed sellers are in the R450 000 to R2.5 million price bracket, although there are also some high value properties entering the distressed market,” he said.
From a Pam Golding Properties (PGP) perspective Golding said the company was gradually experiencing increasing activity in unit sales volumes, albeit reflecting modest growth.
“Areas where we note an uptick include major metropolitan areas such as Cape Town (Atlantic Seaboard), Johannesburg’s northern suburbs and Pretoria,” he said.
“Positively we are also beginning to see some of the stock surplus being taken up by buyers who, buoyed by the increased positive market sentiment, are now making purchase decisions, while sellers who have been waiting in the wings for trading conditions to improve bring stock onto the market as they become more attuned to the current scenario.”
“A key factor in successfully concluded sales transactions is that properties pegged at realistic, market-related prices are those which are moving. In some instances and in highly sought after areas, such properties are being taken up fairly rapidly,” he said.
Golding said their Hyde Park office reported that the market was showing an increase in interest and activity in the past month, and encouragingly, in some instances was seeing more than one offer to purchase on a single property – provided it was realistically priced.
“Here, the sectional title market is also much more active,” he said.
“From a national average perspective we are continuing to see the highest demand in the price range below R5 million, although the high end sector is experiencing increasing movement, and in this regard although activity at the top end of the market remains muted, we are concluding sales in the R20 million to R30 million price band.”
“In the smaller cities and country towns the highest activity is up to R1.2 million, which reflects a similar trend to that experienced last year. In high density areas sectional title properties are in demand, to the extent that in the East Rand suburbs PGP is training specialist agents to deal with the surge in this sector of the market. In Douglasdale in the Fourways area in Gauteng we are seeing an unprecedented demand for cluster homes in the early millions to the mid-R2 million price range,” he said.
While Pam Golding was still noting movement towards outlying areas and towns, such a trend in decentralisation was currently driven more by affordability than lifestyle.
“There is also a change in demographics caused by demand for well priced properties close to conveniences such as shopping and schools eg Berea/Durban North environs in Durban; in Amanzimtoti, south of Durban; Pietermaritzburg; Benoni/Boksburg on the East Rand and Gonubie outside East London,” he said.
While position or location remains a key element in the purchase decision, security is also high on the buyer priority list.
“The market is considerably influenced by the ability to buy ie salaried workers with a fixed income and good employment track record and exemplary credit record, while at the other end of the scale cash buyers remain active at the top end. In addition, retirees with cash are seeking value for money across the price spectrum,” he said.