Gradual but steady increase in property prices and mortgage advances
ABSA Home Loans‘ senior property analyst, Jacques du Toit, believes that your property is set to grow in value by 6% in 2010. His prediction is backed by data from the ABSA Mortgage Advances Report published on March 30, 2010. The report focuses mainly on the the size and number of home loans granted by the banks on a monthly basis.
Speaking in an interview on SAFM, du Toit pointed out that South Africans have overcome the worst in the local property market, and forecasts for the future look brighter. Homeowners should not expect a rapid increase in property prices. The growth in property prices will be very gradual. This is in contrast to pervious years when property prices boomed as soon as the prime interest rate in South Africa was cut. A testament to this, is the fact that interest rates have been cut by 5.5% since 2008 but house prices are still not growing in real terms.
Du Toit explains that the reason for the gradual improvement is because many household are still servicing very high levels of debt. And so, although it has become easier to manage those debt responsibilities many would-be buyers are still unable to qualify to the necessary finance.
“We expect the market over a wide front to pick up gradually and to recover gradually during the course of the year, towards the end of the year”, Jacques du Toit, senior property analyst at Absa.
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