The home buying public of South Africa is very aware of economic trends: they watch the interest rates and home buying tax structures carefully and react to positive measures. This was said recently by Bill Rawson, Chairman of the Rawson Property Group, and, he added, the truth of this statement has been shown yet again in the two weeks following the latest budget.
“After the Finance Minister’s budget speech in Parliament, our group saw an immediate upturn in enquiries. These ensured that the February turnover was 30% up on that of the same month in 2012 and it looks very much as if this pattern will be repeated in March.”
It seems, said Rawson, that relatively small concessions, such as not raising VAT, not increasing Capital Gains and imposing no other drastic taxation have reassured investors who had feared that a more stringent austerity budget would be necessary.
“They now see themselves as probably having slightly more consumer power than they had anticipated,” he said.
These sentiments, added Rawson, are coupled with a widespread expectation that although inflation rises are inevitable due to increased oil and food costs, (Rawson estimates that ‘real’ inflation is already running at 7% plus), low interest rates will remain in place for at least another 18 months.
“In that time we may see a 1 or 1,5% rise in the interest rate, but consumers, I believe, will find that manageable and the general sentiment is that the rise will not be above that limit.”
Particularly impressive, said Rawson, is the way in which buy-to-let investors are returning to property. Rawson Developers’ “The Beaumont” in Claremont recorded nine sales in the week after the budget speech. Asked if this is a reaction to the uncertainty in the highflying but fluctuating JSE Securities Exchange stocks (Rawson has previously identified these as a factor boosting property investment), Rawson said:
“It is difficult to pinpoint the reasons for the return to property by so many investors but, I think, steadily rising rents (at least in the high demand areas) and the traditional South African belief that around 25% of one’s portfolio should be in ‘safe’ property are clearly two of the drivers in this burgeoning market.”
