Great Opportunities for First-Time Buyers in New Developments

If there’s a sure sign that the property market has turned the corner and is on its way up again, it’s the fact that there are now billions of Rands worth of new housing developments under way all over the country.

So says Berry Everitt, MD of the Chas Everitt International property group, who notes that developers – and especially residential developers – are tremendously cautious and conservative, and won’t buy land, plan new projects or start building anything unless they are really sure of a good response and rapid sales.

“However, as Absa reports in its latest housing review, the levels of residential building activity are rising significantly. In the first five months of this year, the volume of building plans passed for new housing increased by 11,3% year-on-year to 21 583 units, while actual housing starts increased 8,6% year-on-year to 17 878 new units.

“And this is very much in line with an improvement in building confidence over the past few months, as reflected in the performance of the FNB/ BER building confidence index. This rose four points to 41 in the second quarter of this year – it’s highest level since 2008, and the first time since 2005 that the index has risen for three consecutive quarters.”

Writing in the Property Signposts newsletter, Everitt says this also accords with his group’s experience on the ground “as most of our offices across South Africa are now reporting new residential development in their areas, as well as the revival of many projects that were mothballed when the recession hit in 2009”.

But the best news, he says, is that most of these developments will deliver homes at prices that are affordable for young buyers and others who have not been able to become homeowners before.

“Enabling more people to enter the market now is what will give it real impetus in the future and the homes in these developments, being new, will be even more accessible to first-time home buyers because they don’t attract transfer duty.

“In addition, developers are quite often prepared to pay the bond registration and legal fees for buyers in their projects, and the banks are quite often prepared to give buyers 100% bonds for homes in developments that they have approved. In short, this is really not an opportunity for prospective homebuyers to miss, especially while interest rates remain at their current 40-year lows.