Reduced access to finance remains a factor in housing market
“Unquestionably, the reduced availability to finance is the single, biggest factor holding back the housing market right now,” states Dr Andrew Golding, CE of the Pam Golding Property group. He was commenting after the Monetary Policy Committee's decision on Tuesday, 22 September 2009, that the repo rate would remain unchanged, saying a reduction in the repo rate would have helped provide a catalyst to stimulate a badly depressed housing market.
“While major lending institutions have recently expressed their views regarding certain relaxation of the strict lending criteria, the evidence of this occurring in a marketplace in a meaningful way remains limited. Perhaps the move towards a more lenient approach to mortgage lending is one that needs to gather momentum before being fully felt in the market.
“It is regrettable that the interest rate now remains static, as a reduction would have a positive impact on a housing market which has seen 50% of the volume of transactions simply dematerialise, and values drop by at least 20%.
“From a general property market perspective it must be noted that there has been a slow but steady improvement in activity levels between buyers and sellers in the residential property market since the start of this year and each month has shown an improvement on the preceding one. We hope, and believe this will continue to improve, creating a healthy impetus by the start of 2010.
“It would certainly seem that we have reached the bottom of the downward trend in house sales, in that the volume of transactions has slowly started to increase, while prices have ceased their downward trend. The group's sales have increased, with each month reflecting an improvement on the month before for the past six months - in particular July and August 2009, which respectively showed an increase of 15 and 20% in sales value over the corresponding months last year. This is off the back of a generally slowly improving market coupled with significantly increasing market share for the group, as our operational strategies appear to have taken effect.
“Generally we are seeing signs of renewed interest and increasing activity across all sectors of the market - with some areas already experiencing a shortage of stock. Even within the challenging market conditions there continue to be a number of highlights, including record house prices being achieved in a several suburbs and areas such as Cape Town's Atlantic seaboard, northern suburbs in Johannesburg, Grahamstown and Stellenbosch.
“A further positive signal is that some developers, who are early adopters of the new market conditions, are beginning to take a more optimistic view and are starting to return to the market, albeit in limited numbers. As trading conditions improve the rest are bound to follow," concludes Dr Golding.
