Smaller, cheaper houses in the residential market were apparently the hardest hit by last years dismal performance by the property market. Smaller,cheaper houses were defined as two bedroom, freestanding homes that cost an average of R332 000. This segment of the market saw a 9.6% drop in the final quarter of 2008, although a large contributor to this was the fact that most of these homes are in low-income areas.
According to FNB’s homeloans department it was likely that investors were reluctant to buy because of the bad growth experienced last year, therefore affecting the buy-to-let market negatively, and by first time buyers not making purchases. Investors and first time buyers usually buy smaller houses as they are easier to rent out and more affordable.
There could be many different reasons for first time buyers not to purchase, tougher regulations because of the NCA making it more difficult to obtain a bond and perhaps even personal choice to remain where they are until the current economic turbulence settles down, all this could have influenced their decisions.
