Property market outlook 2015 'suprisingly positive'

The property market has fared relatively well in 2014 against the backdrop of an estimated economic growth rate of only 1.4%. “There is pent-up demand for residential property after many years of difficult economic conditions. As such, the outlook for the property market in 2015 is surprisingly positive,” says Rhys Dyer, CEO of ooba, South Africa’s largest bond originator. 
 
Since the global recession ended, property prices have risen sharply, gathering momentum in the first half of 2014, although this buoyancy has slowed recently as a result of renewed pressure on household disposable income, higher interest rates and subdued consumer and business confidence.

Home-loan approvals remain steady

“We expect to see a stable market for bond approvals in 2015, with some potential for small deterioration as interest rates continue to rise and thus impact the affordability of consumers to purchase new homes,” explains Dyer.
 
On the positive side, interest rates are still relatively low historically, making now a good time for first-time home owners to gain a foothold on the property ladder, particularly for the aspiring black middle class.
 
ooba’s home-loan approval rate was 72% in the third quarter of 2014, indicating a consistently high approval rate of seven out of 10 home loan applications.
 

Demand for property still strong

Dyer notes that demand for property in certain areas remains resilient, in some cases outstripping supply, which has pushed prices up. “There are certainly pockets of residential property that are showing growth in excess of inflation,” he says. “Sectional-title smaller homes close to city centres will likely show greater growth in 2015, both as a result of affordability, but also as a result of lower maintenance and better security, and will be able to demand higher rentals.”
 
On the whole, Dyer is upbeat about the outlook for the property market next year. “Prevailing conditions are likely to continue for the first six months of 2015,” he says. Even with the challenging economic conditions both internationally and locally, house prices are likely to show modest growth, while rising interest rates will exert some pressure on home-loan applicants.
 
He concludes by saying that investor interest in the property market remains encouraging. “The buy-to-let market, which has significantly underperformed over the past few years, is likely to show an increase in activity in 2015, to satisfy demand for housing. With the rand under pressure, South Africa remains a relatively cheap property destination for foreign buyers, and we are likely to see more activity in this sector.” www.myproperty.co.za