BestBond.co.za - Article: "Articles
2005-06-09 : Affordable level of debt is good news for property boom
R435 000 is the median house price
June 9, 2005
By Roy Cokayne
Johannesburg - Households are able to take on more debt and to afford more expensive houses, which bodes well for the outlook for the residential property market, according to the first Standard Bank quarterly residential property report.
Elna Moolman, the head of South African economic research at Standard Bank group economics, said the sustainability of the buoyant conditions in the residential property market depended not only on the affordability of houses but also on households' total indebtedness and the affordability of their total debt burden.
Moolman said that despite South Africa's ratio of household debt to income rising since the end of 2002, it was still not very high historically or internationally, although it exceeded the 36-year average of 50.6 percent.
Matthew Cook, a Standard Bank Home Loans manager, said there were more investors participating in the property market currently than four years ago, but on average each investor was buying fewer properties.
'This could be attributable to a rise in the number of new entrants in this market who are buying their first investment properties,' he said.
Moolman said 163 000 blacks had moved into the top living standards measure (LSM) 9 and 10 between 2000 and 2003 and could afford a median house, which was priced at R435 000 last month.
SA Reserve Bank data reveal that South Africa's ratio of household debt to disposable income was about 54 percent at the end of 2004. It reached a historical high of 62 percent between 1996 and 1998.
Moolman said the reduction in interest rates over the past two years also meant that, despite the ris"