It is interesting to note the trends in our property market. Cash buyers are dominant now and mortgages have dried up. Standard Bank wrote this piece about their findings regarding property in SA recently:
During the period of the property market boom between 2002 and 2007, there was a surge in speculative investment and development in both high-growth areas as well as in typically weak locations where demand is poor. Lenders eased lending standards, both to development interests and to buyers, and the property supply increased substantially. This increase in supply reached a peak by 2007, leading to supply overshooting demand, which in turn caused price stabilisation and reductions. The current phase, characterised as a recovery phase, has been slow, hampered by weaker economic fundamentals and stricter lending standards. Indeed, it has been a period of high unemployment, resulting in slow growth in household income, coupled with relatively weak mortgage lending. Cash sales (mainly by affluent individuals and investor buyers) could be a prominent feature of such markets, as below-cost buys arrive on the market. The pinnacle of the SA housing boom in 2004 saw around 324 000 transactions, with cash buyers (non-mortgaged transactions) accounting for 25% of sales. After the global financial crisis, transaction volumes fell to around 153 000 in 2009. In recent years, however, the share of cash purchases has risen to around 45% of all property transactions in SA, having troughed at 20% in 2006.
In a recent Cape Times article it was noted that the average time a house remains on the market has increased significantly, and that 96% of sellers have to drop their prices by up to 9,2% on average. So although property is entering a buyer’s market, we have to remember that the Western Cape has enjoyed a fantastic run over the last four years or so, with some areas on the Atlantic Seaboard having seen an astronomical increase in prices.