Large Demand for Low-Cost Property
Bill Rawson, chairman of Rawson Properties says that 80% of residential housing is now aimed at the sub-500k market and most of the remaining 20% is demand for homes in the 500k to R1m range. Rawson added that this can be seen all over the country and is largely due to tighter credit restrictions and high interest rates.
According to Rawson they would like to do more development in these sectors but the high cost of land are making it non-viable. Rawson went on to say that the value of housing has again been proved in the current financial difficulties and that it looks like the world economies will take some time to sort out their debt.
"However, in these difficult conditions South African housing continues to be bought and sold at the levels that pertained in 2006. Even if we dropped to 2004 levels, as seems just possible, the truth remains that housing has been able to ride out the current bumpy patch far better than most asset classes."
Another positive, Rawson said, is the recent auctioned property that achieved higher than expected prices – a sign that investors have restored their faith in the value of property. The new middle class is also tending to upgrade their homes, by either improvement of moving to a different area. This group of homeowners are aware of the value of property and know what they want from their investment – which is usually selling at market price or above.
The information in the article is courtesy of Propety24 (Low coast demand hard to meet – 6 November 2008)
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