Report Predicts Affordability of Property Market

November 11 - Those hoping to be able to afford a comfortable middle class homes like those they grew up in may be disillusioned by a recent report put out by Ewad Kellerman and John Loos of FNB Home Loans.

The property market analytics division published the report this week to examine the affordability levels in the current market and to offer predictions for the future of the market.

The bottom line is that investors should be happy to note that buyers will get less property for the same price, and those who took (and are still taking) advantage of lower than average prices will benefit immensely in the long run.

The crux of the report indicates that the South African property market is still 'correcting' itself from the 1990's, where there was better-than-usual affordability.

"For those who believe that long term trend averages should be the level to which a market should always return, that should signal that the recent market correction has more or less been completed," reads the FNB report.

"For those who see the very good affordability levels of the lat 1990's as 'normal', implying that this decade's property boom was perhaps irrational, the 'correction' still has a long way to go before being completed," it continues.

The report suggests that there no need to rush and snap up properties in a hurry, as the world - and South Africa - are still recovering from the latest recession.

As for the future, the report predicts: "Mounting urban land scarcity will imply significantly higher real property values implying significantly worse levels of affordability: good for the property investor but also implying a dramatic change in middle class urban lifestyle."

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11/11/2009 10:04:54 AM