National Credit Act still limiting sales
STRINGENT CRITERIA The recent half a percentage drop in the interest rates, though welcome, is not as significant a boost to the residential market as might be expected, says Lanice Steward, MD of Cape Town estate agency Anne Porter Knight Frank. “We have to take into account the rises in rates, electricity costs and fuel prices all of which together will nullify the 0,5% reduction. At the same time we can be grateful for it because in a sense it keeps home buyers on roughly the same budget as they had previously.”
The chief limiting factor to growth in the residential property sector, said Steward, is still the National Credit Act and the stringent criteria that it has caused the banks to impose. Nevertheless, said Steward, even here there is some good news. “The latest oobarometer shows that the size of bonds in February 2010 was 13,9% up on those of February last year… partly because property has slightly increased in value (the average South African home sold in February last year at R807 042 but the latest figure is R895 031) but also because the banks are now more willing than previously to accept smaller deposits.” There has also been a marked increase (29%) in the number of 100% bonds issued.