Cautious buyers and market saturation is contributing to a slowdown at the top end of the residential property market, with houses priced over R2-million staying unsold for longer, First National Bank chief economist Cees Bruggemans said on Tuesday.
“What we are currently experiencing is probably only a temporary unease in the property market, as the economy continues to grow lustily,” Bruggemans said in a statement.
However, he says, it will probably take “a new initiative to get the property market accelerating once again” if the 150% increase seen in average house prices over the past five years is to continue.
Further interest rate cuts would be such an initiative for the market, but Bruggemans says this is unlikely considering the recent rise in inflation and “the outspoken carefulness of the Reserve Bank”.
Bruggemans puts buyer caution down to a depressed rental market, with many who bought into the speculative “buy to rent market” losing money as they are unable to find tenants to cover the running and municipal charges of the properties.
He also says, “supply on the side of the housing market has become overheated,” as “many people overnight suddenly decided to become builders and property developers”. – I-Net Bridge