Borrowers should still be careful

This year will probably be a better year for consumers and homeowners, but those looking for mortgages should still err on the side of caution according to Property24.com
“Starting on the long road to recovery, 2009 will still be a tough year for consumers and those in the property industry. Economists predict consumer spending may be at its weakest point in the first half of next year. As interest rates begin to decline, sentiment should start to improve. But in short – a debt-riddled society will still be the issue. Interest rates are expected to be cut by at least 300 basis points by the end of 2009, but it will take time to filter through to the market. The banks are still adhering to strict lending criteria, so obtaining mortgages will only be for those with a good payment profile, with a deposit and who can demonstrate affordability,” says Deon Lessing, marketing director of Betterbond.
According to Jacques du Toit, ABSA senior property analyst, the nominal house price growth is expected to be between 3% to 4% in the 2008-2009 period, while in real terms house prices are set to decline next year.
“The decline in house prices will bring about buying opportunities for investors looking to expand their buy-to-rent portfolio. There will be many property deals available to buyers who have a deposit and clean payment profile or enough money to buy a property with cash. With banks asking for higher deposits and only 50% of bond submissions approved, it will be people with money that will be in the driving seat in 2009. The global recession has also led to the opportunity for South African investors to buy property in countries like the UK, where housing prices have also dropped significantly,” says Lessing.
“2009 is the year to keep it simple and where possible keep expenses down by cutting short-term debt. Property is a medium- to long-term investment and if consumers can afford to take advantage of the market downturn, now would be a great time to do it,” Lessing concludes.