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News Item by justmoney.co.za
The buy-to-let market took another huge dip in the second quarter (Q2) of 2010 but, according to property experts at FNB, it's not all bad news.
FNB's latest Buy-to-Let Survey, only seven percent of buyers are buying to let - down from the nine percent in the previous quarter.
In the last six years, the buy-to-let ratio has fallen from 25 percent in 2004 to its current low levels.
"Along with this decline, agent confidence in the near-term prospects for this segment of the property market also deteriorated further in the quarter," says John Loos, property economist at FNB.
"We've said it time and again that the recent residential market recovery, spanning from around early-2009 and early-2010 was overwhelmingly driven by primary residential demand. The household sector thus have little time for ‘non-essentials'."
Agents who were surveyed however, indicated that the properties where rental income can cover 100 percent or more than 100 percent of a bond repayment is on the increase.
"This is mildly better news for those buy-to-let buyers that utilise credit, although such properties don't yet constitute the majority," Loos says.
"This improvement seems to correlate with Rode data that indicates some renewed flat rental inflation in 2010 after a 2009 slump."
Capital growth is still low but Loos insists that buying a property is still better than wasting money on consumer items.
"Many ‘non-speculative' buy-to-let buyers focus heavily on capital growth, which they are not seeing at the moment."
"It is certainly better than spending your money on consumer items, which is the alternative for many of SA's low-saving households.