Rawson Properties Regional Manager for Gauteng, Sean McCauley, talking recently to a group of possible new franchisees in his area, said that they should not be deterred by the current gloom and doom press that the property sector has been experiencing.
'You have probably seen reports using phrases like 'market crash' and 'a bursting bubble' - but lets take a look at the facts,' said McCauley.
Drawing on the latest ABSA Residential Property Perspective, McCauley said that it is crystal clear that house prices in the main middle-segment housing category (i.e. homes with a building area of 80m² to 400m²), continue to move upward.
'In the third quarter of 2007,' he said, 'they rose 14,7% year on year to create an average house price of R944,000. By January this year this figure had already risen to R962,000. True, we are not now seeing the capital growth of 2006, but ABSA has predicted a 9,6% growth in 2008 and coming on top of phenomenal growth of 294,7% experienced since 2000 this is highly satisfactory and better than many had come to expect'
McCauley also debunked the idea that current interest rates are prohibitively high.
'At 14,5%,' he said, 'they are no higher than they were in August 2003 by when the boom was already well under way. Examining the interest rate graphs since 1950, it is clear that at their current level the rate is still in the bottom one-third for the last 57 years'
'Right now,' said McCauley, 'countrywide we are seeing renewed interest from buyers because there is a lot of stock available and prices are now reasonable'
Another trend usually evident when interest rates rise, said McCauley, is that rentals also rise in direct response to the decrease in buyers. This, he said, is very definitely happening right now.
'Now, therefore, it is once again a good time to buy - and this could lead to increased interest from investor buyers,' he said.
Looking ahead, McCauley said that most property watchers are now predicting that the recent decision not to raise interest rates will continue, followed by perhaps a drop in interest rates towards the end of this year. He predicted, therefore, that the market will continue to jog along satisfactorily for a further six months and then once again start to improve slowly.
'There is,' he said, 'no fundamental good reason to lose confidence in property at this point in our history. We are, as already admitted, no longer in a boom era - but we are a very long way off the US scenario in which property values have actually declined, causing widespread distress. We can be grateful that our government took the necessary precautions at the right time to prevent this happening in South Africa'
