Property news - Black ownership rising

A whopping 47 percent of first time buyers and 36 percent of all owners of property registered at the deeds office in South Africa are black — an increase of 63.4 percent in the past 10 years.

But, says Kura Chihota, Executive Director of the Leapfrog Property Group, this might be giving the wrong impression of transformation within the property industry as many of the deals are formalisations of township leases and activity in rural poor areas, often of an RDP nature.

According to the figures released by Lightstone Risk Management’s tracking services which uses a comprehensive property data base compiled by the deeds office, the Surveyor General and other sources to generate data — as opposed to the banks which use mortgage lending as the source — the overwhelming percentage of property activity by black buyers is in townships and the poorest areas.

Interestingly, however, over 10 percent of black homeowners have bought in estates, about two to four percent in wealthy areas while the remainder in what its research team calls ‘comfortable’ areas.

Chihota says Lightstone’s data shows very low ‘repeat’ buyer profiles since 1997 when the first time black buyers came into the market. Only 27 percent of black consumers have gone on to further property activity compared with 46 percent of coloured, Asian and white consumers who are clearly multiple buyers.

He believes the Reserve Bank’s decision last week not to increase interest rates could further be a sign that the tide is turning in the affordability stakes for home owners.

“We believe that with wage negotiations settling at the 10 percent level and the economy starting to get a handle on inflation, there is pressure on the affordable sub-R750 000 segment and increasing confidence at the upper levels.

“The buyer who was holding on for certainty about rates last weekend, can now sign that offer to purchase with confidence,” he says, explaining that buyers typically buy at their affordability limit and if a stable interest rate environment returned the tables might be turning for would-be home owners.

Chihota believes the negative impact of the high interest rates and constant negativity in the real estate market has had the effect of moderating prices to more realistic levels.

“No matter what happens in world finance though, people still need homes to live in and the time to buy at affordable levels could be now.”

Article from: www.iafrica.com