The South African residential property market is still looking very strong and healthy, and is becoming more active after winter, despite recent interest rate hikes, according to Bill Rawson, chairman of Rawson Properties.
Commenting on the latest Residential Property Price Ranger (RPPR) figures released in the Western Cape, as well as industry updates released by the major banks, Rawson said, "In the Western Cape, the RPPR figures clearly show that the average price of properties sold has recovered, after the winter slow-down, to the level of the April 2006 figures. It is expected that the amount of units sold will pick up in September, with improved weather conditions leading to a heightened interest in property."
He added that, compared to the same period last year, the figures have not changed much, indicating that increased interest rates have not put people off buying property.
Commenting on a recent Absa report, indicating that Gauteng had shown a higher property capital growth than the Western Cape and KwaZulu-Natal from 1998 and 2005, Rawson pointed out that Gauteng properties had also shown the largest depreciation in the high interest rate scenario of 1997 and 1998. "This means they were coming from a very low base and therefore had a large difference to catch up with in terms of property prices. Gauteng is also the economic hub of the country and the African continent, therefore the property market in the province has reacted to South Africa's growing economy, with people becoming more mobile as there are many jobs available and a higher earning potential."
In contrast, the property market in the Western Cape has been more stable and not so dependant on economic conditions. "The report stated that the Western Cape had been the most expensive province for the duration of the report - showing that investing in property in this province will always be a safe option."
The question is always, "Where is the future boom going to be," and Rawson agreed with the statement made in the most recent FNB Property Barometer that the large growth experienced in the lower end of the market will continue. "This growth is subject to the sector remaining affordable because, at the moment, it is the affordability factor that is generating interest, resulting in the great growth figures."
With a reported 74% of properties sold below the asking price according to the Barometer, Rawson indicated that this was a result of over-pricing and the stabilisation of the market. "The market is adjusting, as some of the asking prices have become truly outrageous. Serious sellers have recognised the shift in the market and are coming down with their prices."
