Bill Rawson, Chairman of the Rawson Property Group says that, one of the factors which makes the buying of a home in South Africa, especially if it is done as an investment/buy-to-let venture, more scientific and rational these days than it was 15 years ago, is that today the major banks, bond originators and certain professional analysts publish carefully researched and up-to-date national figures which in some cases, e.g. at FNB, can also be area specific.
However, said Rawson, these figures themselves have been known to cause confusion because they often do not line up with each other. The apparent reason for this, he believes, is that they reflect the market in which that organization is operating (which generally means awarding bonds) and obviously these markets are not by any means all the same. For example, Investec’s bond awards are in more expensive brackets than those of ABSA.
Quoting the respected property journalist, Meg Wilson, who has reviewed this topic more than once in the media, Rawson said that ABSA had ‘put the cat among the pigeons’ earlier this year by affirming that the average value of South African homes was, in fact, deflating and that this had been ongoing for some months. (The actual figures quoted by ABSA were a 19,1% decline for small homes, a 0,6% decline for middle bracket homes and a 0,4% decline for expensive homes.)
“However,” said Rawson, “Meg Wilson has also shown that ABSA’s figures differ quite noticeably from those of FNB and OOBA. This, she has suggested, may be due to the fact that ABSA have shifted their market downwards or have changed their loan criteria.
“If this is the case,” said Rawson, “it would help explain why FNB’s figures, especially their more recent figures, are more encouraging, showing an average house price increase of around 8%.”
In the circumstances, said Rawson, data collected by reputable trained agents might be the most reliable as they relate to one, very often limited, area and tend to cover already defined sizes and configurations.
“The agent,” said Rawson, “if he is any good at all, will be doing comparative market analyses at least every fortnight for one client or another. He will, therefore, have the latest 20, 30 or more sales done in his area at his fingertips and he should be able to relate these to the size of the home, its condition and its position - all of which are relevant factors.”
If the agent cannot produce a comparative market analysis, he is probably either very old fashioned or inefficient – but with today’s training, especially that given by the big franchise groups, the agent is almost certain to be able to do this.
“My advice to buyers is, therefore, by all means call up the national figures and the regional figures as well, if you have access to them, but insist that your agent gives you a full break down (with no omissions) of the recent sales in his area and some sort of analysis of them.
“You should then supplement this information with a little research of your own and if taken together,these figures reveal that in real terms house price growth is still minimal, the data will indicate, in most cases, that in nominal terms, the corner has now been turned – except for low cost homes – and they will give you a very good indication of whether your proposed price is market related or not. Having made that decision, it should not be difficult to decide whether to go ahead with the deal or to allow it to lapse.
