South Africans still conservative about renovations

By Staff Writer

The property market might slowly be returning to normal but, according to FNB's latest residential property outlook, South Africans are still hesitant when it comes to adding valuable upgrades to their existing homes.

According to the report by FNB, in the second quarter of 2010 only eight percent of homeowners were believed to upgrade or renovate their homes. Back in 2004, when FNB first started their residential property survey, 40% of homeowners were making renovations to their homes.

FNB property strategist John Loos believes that the this is because many households have had to curb their spending as the country's economy continues to recover from a recession.

"‘Restricted access to mortgage credit has no doubt also placed a dampener on value-add building activity," Loos told Poperty24.com.

"In addition, South Africans may be loath to invest extra cash in renovation projects given the current weak house price growth outlook."

"In the boom years it was easy to recoup money reinvested in residential property through rapidly rising house prices. But the significant slowdown in house price growth since late 2008 means it has become far more difficult to recoup renovation expenses.

"There may therefore be a view among many homeowners that other investment avenues may yield better returns."

Figures from Statistics SA confirm that money spent on renovations has taken a dive. Completed building plans for additions or alternations to already existing homes dropped by 26% from January to March 2010 year-on-year.

This is bad news for building contractors since they are already feeling the effects of the lack of contracts for new home building activity. Stats SA report that the value of new residential buildings completed from January to May 2010 dropped by 24.5% year-on-year.

Townhouses and flats have been hit the hardest, the number of new sectional title units completed between January and May 2010 is down by a staggering 54% year-on-year.

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