Johannesburg and Port Elizabeth offer the best balance between salaries, affordable homes and the cost of living according to a salary survey compiled by Job Crystal and figures contained in the Absa Housing Review

Salaries in Port Elizabeth for white-collar workers are 16% lower than the national average of R19 293 but house prices in the area were also 16% lower than the middle-segment of R1,02-million.

According to Hano Jacobs, chief executive of Reality 1 International, this means that repayments on a home loan are equivalent to 43% of the salary. In Johannesburg the bond-repayment-to-salary ratio is also 43%.

In Pretoria and Bloemfontein, the ratio climbs to 46% whereas in Cape Town the ratio is 52%. Durban, with its depressed house prices and low salaries, has a ratio of 48%.

According to the JobCrystal survey, people who live in smaller centres are generally happier than those people living in major metropolitan areas and Durban has the highest happiness rating of all South African cities at 61%.

The happiness levels are next highest in the Eastern Cape (60%) followed by Pretoria (57%), northern Johannesburg (56%) and Cape Town (55%).

Jacques du Toit, sectoral analyst at Absa expects that house price may show a slight improvement over the next 12 months but warned that the high ratio of household-debt-to-income, at almost 79%, coupled with the impact of the National Credit Act meant that banks were conservative in advancing new loans.

He has forecast nominal house price growth of about 3% for the year compared with 6,8% for 2010. – property24.com

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House prices depressed in 2011?

The property market is facing a bleak future if the statistics contained in the South African Reserve Bank’s quarterly review are to be believed. It shows that the household-debt-to-disposable-income ratio – a key constraint for the housing market – has actually increased from 78,2% to 78,5% in the third quarter of the year.

However, it points out that the cumulative effects of the easing of monetary policy and the decline in debt-service costs may boost confidence levels and expenditure in the property market next year.

The ratio of debt-servicing costs to disposable income declined from 8,0% to 7,8% while the cumulative interest rates cuts of 150 basis points this year will have an impact on property sales in 2011.

Tendani Mantshimuli, consumer economist at Liberty Retail says that household debt as a percentage of household disposable income increased from 64,3% in 2005 to 80,2% in 2009.

He says that households have been unable to spend the extra money they get when interest rates fall because they use this money to service excessive levels of debt.

The property market has been struggling in the current economic environment even though the Standard Bank’s data showed that house prices actually increased by 3,8% year-on-year while FNB’s data suggests a slightly higher rise of 4,8%.

In the three segments measured by the Absa House Price Index there were clear indications that house price growth was lower in both nominal and real terms in November this year and based on these figures, the major banks are predicting that there will be modest growth of below 5% in 2011.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za