Con­sumers see prop­erty pos­i­tively

Fig­ure is down from third quar­ter of last year

The Star Early Edition - - NEWS - Roy Cokayne

ABOUT 75 per­cent of con­sumers have pos­i­tive sen­ti­ments about res­i­den­tial prop­erty de­spite the tough eco­nomic en­vi­ron­ment and the pres­sure it was ex­ert­ing on them.

This was one of the con­clu­sions of the first Absa home­owner sen­ti­ment in­dex re­leased yes­ter­day.

Absa home loans head of business Pe­ter Swartz said the in­dex sought to bet­ter un­der­stand con­sumer per­cep­tions about home buy­ing, sell­ing, in­vest­ing, rent­ing and ren­o­vat­ing of res­i­den­tial prop­erty.

Swartz said the data showed that 72 per­cent of con­sumers in the first quar­ter of last year had a pos­i­tive sen­ti­ment about the res­i­den­tial prop­erty mar­ket, which peaked at about 83 per­cent in the third quar­ter of last year be­fore de­te­ri­o­rat­ing in the last quar­ter of last year and into this year.

He stressed the con­sumers sur­veyed were the de­ci­sion-mak­ers in house­hold mat­ters.

Swartz at­trib­uted the de­te­ri­o­ra­tion in sen­ti­ment to 74 per­cent in the sec­ond quar­ter of this year to eco­nomic data, in­clud­ing the run-up to the down­grade in South Africa’s credit rat­ings by S&P and Fitch in April, that re­sulted in in­creased fi­nan­cial pres­sure on con­sumers.

The in­dex showed that buy­ing sen­ti­ment im­proved last year be­fore drop­ping 10 per­cent­age points to 60 per­cent in the first quar­ter of this year.

How­ever, it im­proved to 64 per­cent in the sec­ond quar­ter.

Swartz said ma­jor rea­sons con­sumers cited for why it was a good time to buy res­i­den­tial prop­erty in­cluded that prop­erty still ac­cu­mu­lated value, good prop­erty in­vest­ments were avail­able and prop­erty prices were rel­a­tively low and there were bar­gains in the mar­ket.

The big­gest con­cern men­tioned about buy­ing prop­erty in the sec­ond quar­ter sur­vey was that the econ­omy was not do­ing well and was in re­ces­sion.

Swartz said the sen­ti­ment about res­i­den­tial prop­erty sell­ing was much lower than for buy­ing, with less than half of con­sumers in­di­cat­ing it was an ap­pro­pri­ate time to sell.

There is a re­luc­tance among con­sumers to sell prop­er­ties, with the top rea­son be­ing that prop­erty prices are low.

He said there was a re­luc­tance among con­sumers to sell prop­er­ties, with the top rea­sons men­tioned that prop­erty prices were low and they would not re­ceive their ask­ing price.

Swartz said con­sumer sen­ti­ment around res­i­den­tial prop­erty in­vest­ment was one of the most pos­i­tive of sub in­dices, with 85 per­cent of con­sumers in the third quar­ter of last year pos­i­tive about in­vest­ing.

Con­sumer sen­ti­ment about in­vest­ing in res­i­den­tial prop­erty tracked the over­all sen­ti­ment and had de­clined to 78 per­cent in the sec­ond quar­ter of this year.

Swartz said the most cited rea­sons con­sumers pro­vided for their be­lief that prop­erty re­mained a good in­vest­ment were that prop­erty in gen­eral pro­vided a good re­turn, bar­gains were still avail­able in the mar­ket and there was de­mand for rental ac­com­mo­da­tion.

He said the ma­jor­ity of con­sumers be­lieved it was bet­ter to buy than to rent be­cause it was bet­ter to pay off their own bond than rent and pay off some­one else’s bond.

Rea­sons pro­vided by con­sumers for rent­ing re­lated to af­ford­abil­ity and that it was cheaper to rent than to buy and prop­erty prices were high.

A to­tal of 75 per­cent of re­spon­dents dis­played pos­i­tive sen­ti­ments in the sec­ond quar­ter of this year when asked if it was a good time to ren­o­vate or do al­ter­ations to a prop­erty.

Swartz said the most im­por­tant rea­sons pro­vided for this sen­ti­ment were that ren­o­va­tions in­creased the value of a prop­erty and it was good to con­stantly up­grade a prop­erty.

He ex­pected the over­all in­dex, which would be re­leased quar­terly, to re­main un­der pres­sure for the re­main­der of the year be­cause of the un­cer­tain eco­nomic en­vi­ron­ment.

Carel Grönum, the man­ag­ing ex­ec­u­tive of of Absa Home Loans, says they have a three-year plan ot ex­pand its lend­ing business.

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