A Further 2% drop in interest rates needed to get residential property development moving

Shiraaz Hassan, Marketing and Projects Manager at the Cape headquartered Asrin Property Developers, one of the three largest development companies at the Cape, has added his voice to those of others in the property sector who are calling for a further 2% drop in the interest rates sooner rather than later.

“Only a drop of that size,” said Hassan, “can revive an industry that has seen turnover fall by 50% in the last 18 months.”

Also urgently needed now, he said, is a review by banks of their lending policies.

“We appreciate that the banks, as a result of the global economic difficulties, are now facing liquidity problems, but with no applicants getting 100% bonds and only a favoured few getting 90% bonds, most applicants today have to settle for a 70% or 80% loan. Under these conditions the residential sector is unlikely to grow at a significant rate.”

Hassan said that those, like himself, who are actually dealing daily with would-be home buyers are acutely aware that there is a huge pent up desire “out there” for home ownership that is right now not being met.

“Part of the solution,” he said, “could be a subsidy to buyers rather than to the industry, as some have suggested. The first time homebuyers’ subsidy has on the whole worked well. Could a similar concept not be extended to other categories of buyers, particularly those in the lower income levels where housing is so urgently needed? With many of those who do qualify for a bond, sitting on the sidelines and waiting to see what will happen, we need to open the market to a wider spectrum of buyers.”

Article by: www.asrin.co.za