Residential property to mirror SA economy: Jawitz

Residential property to mirror SA economy: Jawitz

Uncertainty remains as to the rate at which the economy may grow or contract over the next 18 months.

The residential market in 2012 will, for the most part, mirror the performance of the South African economy, which is holding its own despite global trends. Uncertainty remains as to the rate at which the economy may grow or contract over the next 18 months according to Herschel Jawitz, CE of Jawitz Properties.

"The residential market is no different and given the current economy, it would be difficult to expect anything else. Price growth, even if in nominal terms only, is managing to hold its own given current economic volatility."

Jawitz said that current price growth was appropriate to the economy especially when issues such as disposable income, affordability and bank lending were taken into account. If property prices were to grow beyond current inflation, it may well reduce demand below the current levels based on affordability. Real price growth taking into account inflation was always first prize, but in the current economy it is likely to impact on affordability and inhibit demand.

"Banks continue to report soft demand in the market, but these are general statements and do not necessarily reflect the market as a whole," he said. "Coastal leisure markets are under pressure and will remain so for some time as supply significantly exceeds demand.

"It is not the same however in the metro areas, particularly in the price bracket up to around R3.5 million where demand, while not strong, is better than the banks' research suggests. There is activity."

"Interestingly, lending on cars, personal loans and credit cards is increasing at a much faster rate than mortgage financing. Ironically, it would appear to be easier to get an unsecured loan than a mortgage loan secured by bricks and mortar.

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