The houses for sale market remains sluggish as expected however there have been isolated cases that would indicate the market maybe experiencing a second mini recovery.
Standard Bank has reported that its median house price growth rose in March to 2.9% year-on year (y/y) from 1.5% y/y in February. This sentiment was echoed by FNB’s house price index last month, which indicated an increase in demand in the first quarter of 2011 as well as the last quarter of 2010.
This increase in demand can be attributed to a second mini recovery during the summer months brought about by the usual seasonal factors, interest rate cuts in September and November which have led to lower debt servicing costs as well as a moderate growth in household disposable income.
Both financial institutions are however of the same opinion, that inflationary pressures and possible rate hikes later in the year will curtail any significant recovery in the residential houses for sale market.
According to FNB’s survey for the first quarter, estate agents are reporting a decline in the people selling for negative reasons.
Lew Geffen of Sotheby’s International said, “Contrary to the bleak picture in the market, the good news was that there is less distress house selling as people are selling either to upgrade or downgrade”. “The interesting thing is that the middle to upper classes still have cash and are purchasing properties with 50% bonds as they realize this is an opportune time to buy”.
Generally agents are reporting an increase in buyer activity however obtaining bond finance is still one of the biggest drivers in the property market and remains a huge challenge.
According to Ooba, they have seen a steady increase in approval rates with a year on year increase of 5% to 64.8%, while applications being approved by one lender after being declined by another increased by 1.4% to 23.3%. The improvement in the number of bond grants can be attributed to the large financial institutions relaxing their lending criteria, which bodes well for the houses for sale market.