Property Market 2011 - Predictions

[SEO_CapeTown]

To the MYBB property market experts :

Any predictions for the market in 2011?
Slow down? Worse than 2010? Improvement?

Auction Alliance chief executive Rael Levitt thinks it will weaken further.



http://www.fin24.com/Economy/Housing-market-loses-fizz-20101222

I see a long, slow recovery with growth in the region of 3 to 6 percent per annum for the next 3 to 6 years. This is a once in a lifetime shakeup we are coming out of and the recovery is likely to be slow, steady and unspectacular.

 

[noxibox]

Houses were ridiculously overpriced. Now they're still expensive, but more reasonable.

As for first time buyers, I'm not that sympathetic to them. If they were sensible, they'd have saved up for a deposit from their first pay cheque, and bought their first place in their 20s; not bought a flashy car (on credit) with their first pay cheque and then upgraded that car 3 years later.

It's not that easy. It was particularly difficult for people during the boom. Sure some people were spendthrift and that's why they couldn't afford it, but that's not a universal reason.

 

[supersunbird]

Houses were ridiculously overpriced. Now they're still expensive, but more reasonable.

I think that building costs are expensive and houses obviously will be priced around what it would cost to build it new since thats what supply and demand will dictate...

 

[noxibox]

I think that building costs are expensive and houses obviously will be priced around what it would cost to build it new since thats what supply and demand will dictate...

I don't know that building costs were a prime factor. Lots of demand and easy credit meant sellers could push for higher prices. Developers would have been able to do the same regardless of what it cost to build. Building costs did go up, but then how much of that was builders realising they could charge more because houses were selling for more?

 

[mich_m]

I see a long, slow recovery with growth in the region of 3 to 6 percent per annum for the next 3 to 6 years. This is a once in a lifetime shakeup we are coming out of and the recovery is likely to be slow, steady and unspectacular.

I agree totally. Slow but steady recovery.

 

[supersunbird]

I don't know that building costs were a prime factor. Lots of demand and easy credit meant sellers could push for higher prices. Developers would have been able to do the same regardless of what it cost to build. Building costs did go up, but then how much of that was builders realising they could charge more because houses were selling for more?

I meant the physical house building material prices: concrete, bricks, fittings and all that...

 

[TheGuy]

I'm buying 2 bedroom in Mooikloof Ridge for under 500 and it's a beautiful complex. The developer is saying they are still struggling with unsold properties but it seems to be picking up now.

 

[TKD01]

stronger growth in desirable areas

True - here in CT its quite clear that certian areas are expanding agressively with new developments

As for first time buyers, I'm not that sympathetic to them. If they were sensible, they'd have saved up for a deposit from their first pay cheque, and bought their first place in their 20s; not bought a flashy car (on credit) with their first pay cheque and then upgraded that car 3 years later.

Maybe it was the case like that back in the early 90's. Life is not that easy for someone who graduated a 5 or 6 of years ago... Through your articles period you basically earn enough to barely survive on brown bread and baked beans, whilst paying off student loads... and by the time you earn enough to live, house prices already went through the 2005/6/7 escalations.

 

[TheGuy]

Maybe it was the case like that back in the early 90's. Life is not that easy for someone who graduated a 5 or 6 of years ago... Through your articles period you basically earn enough to barely survive on brown bread and baked beans, whilst paying off student loads... and by the time you earn enough to live, house prices already went through the 2005/6/7 escalations.

You cannot tell me that a qualified auditor at any time in the last few years did not make enough money to be able to afford a house. Then something is seriously wrong.

Drunkard #1 is right I see everyone driving around in BMWs and Mercs these days especially young people.

 

[Viper25]

You cannot tell me that a qualified auditor at any time in the last few years did not make enough money to be able to afford a house. Then something is seriously wrong.

Drunkard #1 is right I see everyone driving around in BMWs and Mercs these days especially young people.

+1 , Although if you are young and if you can afford to buy your first place and thereafter buy that flashy car, I dont see anything wrong in that.
But no point in buying a flashy car while renting in a 1 bedroom flat.

 

[TheGuy]

+1 , Although if you are young and if you can afford to buy your first place and thereafter buy that flashy car, I dont see anything wrong in that.
But no point in buying a flashy car while renting in a 1 bedroom flat.

Exactly its just about getting your priorities in order. I also want a nice car but I'm holding out till my place is close to being paid off.

 

[Viper25]

Interesting article

Property prices won’t go up this year
01 Feb 2011



Property prices in the residential property sector are unlikely to rise this year because of low demand for new homes coupled with high levels of debt among consumers.


Residential property prices are unlikely to rise this year because of low demand for new homes coupled with high levels of debt.
The year-on-year house price index increased by just 1,4%, considerably lower than December’s revised figure of 3,1% and was driven by weak growth in demand for houses as property owners appear to consolidate their financial positions.

John Loos, property strategist at First National Bank (FNB) says that the poor price growth is the result of weak demand and high levels of household debt relative to disposable income.

“Strong residential supply [of homes], an overhang from the building boom of a few years ago, as well as high levels of financial pressure-related selling play a key role,” says Loos.

FNB’s valuers believe the market is unlikely to improve much this year and the Valuers’ Market Strength index has increased to +0,152 from +0,142 in December.

“The collective opinion of valuers is that demand relative to supply has weakened further from a rating of -0,209 in December to -0,235 in January and is a continuation of a weakening trend in the Market Strength Index going back to July last year,” says Loos.

Turning to the inflation rate, Loos says local inflation levels are “far from troublesome” with the December CPI inflation rate recording a low of 3,5%.

“We believed that the rate cut cycle has ended and that we could see the start of a hiking cycle starting early in 2012,” he says.

“The two successive interest rate cuts in 2010 have done little to halt the declining trend in house price growth and continues to be reflective of the significant financial pressure and high levels of debt still being experienced by the household sector.

“We see the property market remaining flat with average price growth close to zero for 2011,” says Loos.

http://www.property24.com/articles/property-prices-won’t-go-up-this-year/13051

 

[blunomore]

Any indication of when the sales of vacant stands will pick up again? We have been trying to sell a stand (Port Alfred) for a while now, and most estate agents talk about 24 months before we can see any movement.

I guess that is directly related to the cost of building ... any predictions on that ?

 

[Paul_S]

I guess that is directly related to the cost of building ... any predictions on that ?

I think the problem that is a combination of factors.
1. Banks are not easing their lending criteria
2. The majority or people (about 90%) buy houses as their primary residence
3. The price of building is still about 30% higher than the current market value of existing property

The majority of people want to buy a roof over their heads - not buy to build - and since the current property market is undervalued people will first buy property with existing houses on it.
Once the price of building is back in line with current market prices (which could take years) people will start contemplating buying property to build.