Residential property to consolidate through 2011

FNB’s June House Price Index presented a sobering view of the once bustling South African residential property market.
With houses turning in sub inflation growth, sellers are going to have to price their houses more realistically, while buyers are becoming increasingly more professional in their buying decisions.
Current high debt to disposable income levels place owners under pressure to service their mortgage obligations. The residential market will remain stressed and the need to downscale will continue, especially where there are income and job losses.

Downscaling from more expensive properties creates more opportunity for both first time and investment buyers. The increases in home owners’ costs sharpen the focus on affordable, high density living spaces.
Developers have already started to pick up on this trend.
It is quite likely that subdued conditions may continue through to the early part of 2012 and longer should interest rates start climbing.

Household budgets are under pressure from other expenses such as transport, education, municipal rates and electricity add to the woes of the South African housing market.

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