South African properties to appreciate below inflation this year

Properties across South Africa are likely to rise by 3.7% in 2020, below the inflation forecast of 4.3% over the same period.

House prices only grew by 3.6% in 2019, FNB’s Q4 Property Barometer found.

Kevin Penwarden, chief executive at SA Home Loans (SAHL), said: “In the more traditional middle-income market, the average value is around R850 000 – which is barely a 5% increase over the past five years.

“In our emerging market of more affordable homes, we have seen a better growth, but still only around 10%, taking the average bond to a little over R400 000.

“It remains difficult for first time buyers and younger people to enter the property market, as they do not have the savings, the cash flows and the credit records typically needed.

“Even in more affordable housing, the costs of new buildings limit the growth in first time buyers.”

The upside for potential buyers is it’s apparently easier to secure a 100% bond from a bank, so the barrier of paying a deposit can be removed.

Penwarden said competitiveness between the major lenders has led to a strong, consistent trend towards 100% bonds.

It’s also very much a buyers’ market.

Penwarden added: “In this type of market, buyers have far more wiggle room when they negotiate.

“So this could be the moment to get your foot in a suburb near your kid’s dream school or buy a home with the extra features you’ve always wanted.

“It is also a very good time to buy in the price range for a buy-to-let investment arrangement.”

Siphamandla Mkhwanazi, FNB property economist, said: “Positively, demand for mortgages has shown mild signs of improvement across all price segments.

“At the same time, some sellers withdrew their properties on the market for resale amid unfavourable selling conditions. This has somewhat curtailed the pace of supply.”