Rode Report is one-dimensional and sends wrong message to ordinary buyer

Samuel Seeff.

Seeff Chairman, Samuel Seeff says the view of the latest Rode Report is one-dimensional and sends the wrong message to the ordinary buyer. Rode

Rode says that although house prices will increase marginally in nominal terms, they are in real terms still overvalued by 25 percent. Adjustment will take some time and he therefore recommends renting for the next five years as there is likely to be no significant capital growth over this period.

In contrast to the commercial market, the residential market is driven by emotional needs, says Seeff. About 95 percent of buyers are not looking for investment returns or rental income, but want a foundation upon which to build a life. These are ordinary buyers looking to acquire their first home, expand or move closer to schools or jobs and cannot put their life on hold. No value can be put on owning the roof over your head; it is an investment in your own future and stability.

Seeff reiterates his view that with the interest rate at a 30-year low and mortgages more affordable than ever, market conditions are heavily weighted in favour of buyers. Prices levels have already adjusted by between 14 and 20 percent on average against their pre-2008 highs and we do not foresee wholesale price drops, but expect sideways movement with trading at similar levels to last year. By waiting for prices and interest rates to decline further, these buyers risk getting caught up in a market on the upswing.