SA Mortgages - Buying homes is all about affordability
The level of home buying activity in the middle-income and lower-income segments held up better in the second half of 2010 compared with the higher-end segment, although both saw activity levels decline from earlier in the year. A significant number of property sales in the second half of 2010 were due to downscaling as a result of financial pressure.
The FNB Estate Agent Survey, released on Thursday, suggests that the upper-income segment appears to have slowed the most sharply from an early-2010 peak, while the high-net-worth segment continues to show the weakest demand reading, having remained relatively flat throughout 2010.
FNB property analyst John Loos says the relative segment results are not too surprising, given that an increasing precentage of agents taking part in the survey have indicated in recent quarters that income levels are way behind property price levels.
This, coupled with the second half of 2010 seeing all segments except the high-net-worth segment averaging above 20% "selling in order to downscale due to financial pressure", reflects the still-significant degree of household sector financial pressure.
"In this environment, affordability is key and the lower end of the market was bound to outperform the higher-income segments. The patterns unfolding in the survey results therefore more-or-less fit in with our own estimates of segment average-price trends for the country's six major metro areas, for which we utilise deeds office records of property transactions by individuals only," Loos says.
In the fourth quarter, the year-on-year price growth in the affordable areas - valued at about 418,747 rand - still recorded the highest rate, at 17.5%, followed by middle-income areas, at 13. 4% (761,208 rand).
Next on the ladder were high-income areas - 1.153 million rand - with growth of 11.1%, and lastly "top end" metro areas, with 11% (1.961 million rand).
Source: I-Net Bridge
Courtesy: Agent – The Official Publication of the Estate Agency Affairs Board
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