PUBLISHED 12 DEC 2009
Affordability is going to be vital in
maintaining the early momentum of the property market recovery and in
this context the longer that interest rates can be maintained at
present levels, the better.
Gerhard Kotzé, CEO of the ERA South Africa property group, says there’s
no question that the market is picking up steam but that the recovery
will not become full blown until a number of factors fit into place.
“And key in this respect is the cost of property in relation to
disposable income – that is, the affordability factor, which is of
course influenced by employment levels, household indebtedness and
property prices per se, but mostly by interest rates.
“The rate of inflation comes into the picture here and while the good
news is that it has declined to within the Reserve Bank’s target range
of 3% to 6%, we are concerned that this situation may not last long
since there are Eskom price hikes in the picture, wage increases due
next year and budget deficits in the Treasury which will have to be
financed by borrowing.
“On the plus side for the property market, however, the banks are
easing open their lending purses again and there’s a more positive mood
in the market as evidenced by good turnouts at show days and more
importantly, by the number of sales concluded – something to which we
as a group can attest.”
In short, he says, great care is still needed not to upset the current
favourable balance of positive against negative factors tipping the
market towards full recovery, and the best help now would be for
interest rates to at least be kept stable.
Source:
Property Trader
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