While there is no denying that the residential housing market has experienced a near 35% drop-off in countrywide sales volumes, there is a wide range of opinions as to how long this 'stabilisation' period will last. On average, house prices year on year have fallen by approximately 10% in many areas and most people are wary of the real estate market. Discussing this matter recently, Tony Clarke, MD of the Rawson Property Group, said that Tito Mbowenis latest statement indicates that South African consumers are now reacting as intended to the hikes in the interest rates and are at last cutting back on spending '“ but a further 0,5% hike in the rates in August is likely. This, said Clarke, could well be the last increase we will see. 'If that reading of Mbowenis statement is correct,' said Rawsons Clarke, 'it means that the long-awaited decline in the interest rates should start in the first quarter of 2010 and, once that happens, confidence in residential property will return, as it always does when consumers no longer fear rate rises' This is almost assured as there is usually a fairly long period with a stable interest rate after the increases have peaked and levelled out, allowing consumers and buyers some breathing space.
The Reasons for this Improvement
Clarke said that several factors lend credence to this expectation. There has recently been an improvement in the trade deficit and there are now definite signs that inflation, with the CPIX peaking at 11%, will stabilise by the end of this year. By then, too, a solution to the Zimbabwe situation could be on the way. 'The Rawson analysts are, therefore, now looking for a levelling off by the end of this year and a slow but steady upturn towards the end of 2009, with the market strong again by 2010. Unless further unforeseen factors crop up, I see that as a realistic assessment of how the market will perform' According to Clarke, the Rawson Property Group has fared better than most in the current situation largely because of its market positioning. "As we have said before, now is an excellent time to buy because good property deals are available throughout SA'
