Looking into the 2014 property market.
Category Property Market
The year 2014 is going to be a good year for residential property and those aware of the market trends should be buying right now, says Rawson Group chairman, Bill Rawson.
“From my viewpoint, the Absa prediction of 9 percent growth in house prices in the coming year is absolutely spot on,” he says.
The factors working in favour of steady growth in house prices in Rawson’s view are:
- The strong likelihood of inflation being contained below 6 percent and therefore interest rates remaining at low levels for most of 2014.
“I think it is possible that, to give the right impression in the run-up to the election and show that they have South Africa’s economic growth at heart, the government will, in fact, reduce the interest rate by a further 0.25 percent.”
He says although this would appear to be no more than a token gesture, it would win the approval of the influential trade unions and other powerful bodies and it would help people to reduce their debt and have slightly more spending money and this augurs well for the housing market.
- Increased infrastructural spending and the resultant job creation.
“The funds allocated for internal development in South Africa have, so far, not been fully used and I see the state opening the taps further from now on and this will put extra cash into the consumers’ pockets as well improve the efficiency of our transport networks, roads and other infrastructural components.”
- The growing shortage of homes and the resultant willingness to pay above previous price levels.
Rawson says the danger is that we are already seeing in a few instances, that banks might find it difficult to ‘see value’ in some of the properties for sale.
If this happens, home buyers may find 100 percent and 90 percent bonds harder to come by.
In general, however, the demand for homes is increasing and this will have a positive effect on prices, he adds.
Author: Property24
