Another chief executive in the real estate sector, Tony Clarke, MD of Rawson Properties, has come out with a strong statement condemning some of the "decidedly negative" media reports published recently throughout South Africa on the current conditions in the residential property sector.
"Too many people's thinking," said Clarke, "has been skewed by the exceptional conditions that we enjoyed from 2002 to 2007. It has to be accepted that property is a long-term investment and is subject to cycles. Now that the market has swung in the buyers' favour, some homeowners have been talking as if we are facing a collapse in house prices '“ but nothing could be further from the truth."
Certain fundamentals, said Clarke, have always to be borne in mind. These are:
· Regions in the South African property market perform differently and applying national averages on property price growth '“ or the lack of it '“ can be misleading.
· The national averages or median prices have dropped as a result of the greater activity at the lower end of the market which has been far more active than the upper brackets '“ and this situation is likely to continue for some time.
· Despite the bank reports on this subject, South African homes have not witnessed negative growth this year and most areas are seeing between 8 and 9% growth.
· Even with further hikes likely this year, the current levels of interest rates are not excessive. 'Over the last 16 years we have seen interest rates average between 15,5 and 16%. The present rates are, therefore, very definitely not that damaging to property trading although obviously they do have a dampening effect'
· House prices will in the not-too-distant future begin to reflect the cut-back in new developments which will inevitably follow the lack of Eskom power. The shortages that will follow, said Clarke, will make existing property more valuable '“ and will push up rentals.
The major factor influencing the market, Clarke said, has been the National Credit Act. This, he said, has led to a drop in unit sales turnover and has made buyers far less impulsive and far more determined to bargain.
'In some instances we have been seeing 'cheeky' offers submitted at up to 30% below the asking price. Buyers are now prone to making these offers in the hope that they will get lucky, but even the prevalence of this type of offer does not indicate a fallout in the market as in the USA '“ it is simply another pointer to the fact that right now buyers are in a stronger position than they were'
Looking ahead, Clarke said that there is now widespread acceptance in the property sector that interest rates will begin to decline from the second quarter of 2009. This, he said, should lead to renewed demand for property which will be further boosted by the '2010 factor', the influx of visitors and the world-wide publicity that South Africa will attract as a result of hosting the Soccer World Cup.
'The message, therefore, from Rawson Properties to our public is that now is an exceptionally good time to buy '“ as many of our clients have already realised. Estate agents, of course, can always be expected to say this '“ right now it happens to be true. Good buys are now far easier to come by than they were a year ago and, as I have indicated, the prospects for significant long-term growth, starting next year are, I believe, very good'
