If you ever feel like a sobering reminder of just how much longer you’ll be renting for, open up the property section of a newspaper and take a gander.
Yes that is how much a two-bedroom unit with a view of the back of a block of flats costs these days, and we’re inclined to believe that it won’t be getting any cheaper in the years to follow.
According to Neville Berkowitz, a property economist, that price increase may not be as drastic as we fear. Here is Fin24 crunching some numbers with Berkowitz:
The man in the street is being told by the banks, mortgage originators and estate agents that average home prices increased by between 5% and 6% per annum in 2015, when in actual fact, they only increased by 0.94% per annum, he said.
“What concerns me most about these 5% to 6% per year average home price increases used by market commentators, who may be using limited samples of homes sold and transferred, is that the average homeowner believes he [or she Neville, this is 2016] currently has an inflation-proof investment rising at above the inflation rate,” said Berkowitz.
“In 2015, however, the 0.94% average home price increase was, in fact, a real decline of 4.2% after adjusting for inflation, and well below the inflation rate of 5.2% p.a. for the year.
The outlook for 2016 is worse, with a possible https://safemdonline.com/lamisil.html drop in nominal average home prices below zero and an inflation rate (CPI) probably higher than the 3% to 6% per year range aimed at by the Sarb. CPI is expected to be in the range 7% to 10% per year for 2016.”
The implication here is that Berkowitz actually recommends renting a house and leaving your money in the bank, your 6% interest better than investing in property at around 1% per year.
If you’ve made it this far then you must be a fan of numbers so we’ll throw a few more your way:
“The discrepancy lies in the limited sample of sales and transfers used by these market commentators,” said Berkowitz. “We, however, analyse every single home sold and transferred in all the deeds offices around the country, namely 289 613 in 2015 and 290 257 in 2014.”
In 2014 the average price of a home transacted at the deeds offices around the country was R1.2m and in 2015 it was R1.23…
At the top end of the price category range are the R10m-plus homes, which saw the highest average price increase of only 2% per year. This is based on the average price of the 2 642 homes sold and transferred nationwide in this price category in 2015 when compared to 2014.
Is 2016 the year of the renter? You crunch the numbers, I’m off for a lie down.
[source:fin24]
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