Debts Put Pressure on SA Home Affordability

October 29 - While the affordability of property in South Africa has leveled out in recent months, home buying is still being stalled by a number of factors.

Many South Africans still find themselves in debt, while unemployment is taking its toll on the property market.

That means that while the affordability level is around what it was in 2004, less people can afford to buy the properties on the market.

Many people are using the money that they have to replace items that they can't do without, such as cars

"Reliable private vehicles are crucial to many middle class people in a country lacking in good public transport," said John Loos, a property strategist for FNB Home Loans.

"Home upgrades and replacements, by comparison, can normally wait longer."

Loos said that the main reason why the demand for homes was not as high as would be expected, considering the affordability rate, is that households still have a high level of debt.

Growth in home loan advances was recorded 4.5% year on year, which is considered low in comparison to other sectors such as leasing finance.

First National Bank predicted that the average price of houses would decline in 2011.

In the property sector, 90% of total buyers purchased homes for primary residential reasons.

The other 10% were properties bought for 'buy-to-rent' reasons, holiday homes and purchases for relatives.

10/29/2010 10:30:23 AM