Lower end of market booms but few buyers qualify for bonds

Lower end of market booms but few buyers qualify for bonds

Figures from the Deed Offices show increased sales in the lower section of the residential property market.

Rawson's managing direction Tony Clarke says that about 40 percent of all property sales in South Africa were for properties valued below R400 000 and 80 percent of buyers were looking for homes priced below R600 000.

'This would appear to indicate that a significant number of lower income earners are now at last realising their dreams of becoming homeowners. The reality, however, is that far more are still unable to afford homes,' said Clarke.

'The problem is that the high percentage of buyers at the lower income levels don't qualify for bonds and most developers are just not capable of bringing new homes to the market at prices below R700 000.

'In the R700 000 to R1.2 million bracket there is now a flourishing development market, but, as indicated, such homes are too expensive for nearly 80 percent of South Africa's potential buyers.

'This is not a healthy situation. Many of us working in the property sector believe that a government truly committed to home ownership should be assisting by implementing such measures as:

Offering the banks guarantees on low value bonds - provided the applications have been assessed with the usual care and thoroughness.

Donating some of the many thousands of hectares of land that the government owns to development.

Expropriating suitable sites at market-related prices and making them available to developers, possibly on a paylater basis when their projects are sold out.'
He said home ownership fosters stability and provides homeowners with places from which they can run businesses, which can greatly encourage entrepreneurship.

'Also, once home ownership becomes a trend in any community it has a marked 'push-up' effect on the market as a whole, for the simple reason that people will always aspire to better lifestyles, will upgrade their homes and will move up to more expensive units.

'New development also creates opportunities for estate agents to operate in areas where they have never been before, and it is always heartening to see jobs created in this way. However, without this sort of state assistance, the low cost market will never come anywhere near being able to satisfy the pent- up demand for homes,' Clarke said.

Weekend Argus (Sunday Edition)


Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!