PUBLISHED 22 JAN 2010
The investment potential of property is beginning to look decidedly more positive as we begin the new year.
That’s the word from ERA South Africa CEO Gerhard Kotzé, who says the
market has definitely ‘bottomed-out’ and that although there will
probably be no fireworks in the next 18 to 24 months, the foundations
are in place for a return to sustainable growth.
He paints this picture against the backdrop of a fledgling general
economic recovery, where, in the third quarter of last year, gross
domestic product (GDP) rose 0,9% after contracting for the three
previous quarters.
In addition, the Reserve Bank’s leading indicator rose 4,2 points to
116,6 in October, following a 2,6 point rise in September. This
indicator combines several measures including manufacturing hours
worked, new building plans approved, vehicles sold and share and
commodity prices and is regarded by economists as a reliable forecaster
of the economy in six to nine months.
“On the back of these developments, the economists are predicting that
nominal house prices will rise by 10,8% in 2010, followed by 12,1% in
2011 and 12,7% in 2012.
“In nominal terms therefore, house prices should rise by 30% or more
over the next three years. That’s a far cry from the huge annual
increases we had at the height of the last property boom, but it’s an
indication of a healthier, more sustainable market.”
Kotzé says that signs at the “coalface” already indicate the changing
mood in the market, with increased demand across the price spectrum.
“Problems remain in terms of bank finance availability and some sellers
are getting ahead of themselves and beginning to over-price again, but
these issues are manageable with the right professional input.
“Meanwhile, investors have appeared on the scene again, often with cash
offers, and the supply of housing stock is being steadily whittled
away, setting the scene for the entry of more developers into the
supply equation, although their competitiveness with existing
properties could be jeopardised by unwarranted increases in building
material costs.”
He notes that some geographic areas and types of property will of
course do better than others in the coming year. Accordingly, buyers
are advised to do their homework well and ensure that any purchase is
viewed as a medium to long-term investment (five years or more).
Source: Property Trader
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