Chronicle EditorCAPE TOWN. – From a real estate point of view, SA’s downgrade by ratings agency S&P will likely cause a drop in housing demand within the next few months, according to Shaun Rademeyer, CEO of bond originator BetterBond. In his view this will be due to falling employment prospects and rising living costs that make it more difficult, especially for first-time buyers, to qualify for home loans.
“We could also see a simultaneous increase rise in the number of existing home owners and investors who are no longer able to afford their properties and are seeking to sell them in order to avoid repossession. And, depending on how great the imbalance between supply and demand becomes, we could see property values actually start to decline,” said Rademeyer.
However, Rademeyer added that, although many consumers will be in for a tough time next year, there will be opportunities, especially in property.
“For example, the demand for rental properties is likely to spike in the downgrade scenario, and those who are able to acquire such properties now for cash or with large deposits are set to do very well out of their investments in the longer-term,” said Rademeyer.
“Those who can move fast to sell their existing properties and realise the equity that they have built up in these homes will also be in a position to upgrade to bigger and better homes they will be able to purchase at a significant discount to market value – although they will need to check first that they will qualify for a new loan.”
Meanwhile, those who have saved and planned to become home owners should proceed without delay, in his view. While interest rates and the income qualification levels for home loans are still at relatively low levels. – Fin24.
Online Reporter