Residential property sales likely to remain subdued
Lack of consumer confidence, not affordability, remains the main stumbling block
It may be the best time to buy a house since the global economic crisis, but 2019 is unlikely to see an influx of new buyers, according to Herschel Jawitz, head of Jawitz Properties.
In 2018, the average house price in SA grew by only 3.7%, according to FNB property sector strategist John Loos, the lowest growth in seven years.
This was the third straight year that house price growth had fallen in real terms, once inflation had been stripped out. The average house price growth recorded in 2017 was 4.2%.
This means it is a good time to get into the housing market, which looks to have bottomed out, according to Jawitz.
“I don’t think prices will fall off a cliff in SA overall this year. It’s more likely that we’ll see similar growth to last year unless we get a sudden boost in economic growth,” he said.
Property price growth across all the major metro regions was expected to remain subdued in the first half of 2019, and national nominal price growth was expected to be between 4% to 6%.
“The 2019 residential market will continue to offer buyers the best value in terms of property prices and buying opportunities since the 2008/9 market crash,” he said.
The biggest factor preventing house sales was not affordability, but a lack of confidence, according to Jawitz.
“Consumer confidence holds the key to any possible turnaround in the residential market in 2019. While consumer confidence remains in positive territory, it has not yet translated into an increase in the demand for property by buyers,” he said.
Homes were taking an average of three-and-a-half months to sell with this extending to six months and more at the top end of the market.
There is an oversupply of residential property across almost all price sectors in the re-sale and new build or off-plan market.
His comments on Friday came after Loos released a report on Thursday which said that new mortgage lending was under pressure in SA.
The December 2018 Reserve Bank Quarterly Bulletin showed the value of new mortgage loans granted for residential, commercial and farms had declined at a year-on-year rate of -15.91% in the third quarter of 2018, down from the +6.08% positive rate registered in the previous quarter.
Jawitz said that while the value of mortgage loans could be down for residential property, it didn’t mean that the number of new loans being made had fallen. Finance was still as available as it had been for at least a decade as banks fought for market share.