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Crystal Ball View of 2007
Business Day
19 January 2007
The economists had their turn late last year. Now KERRY HAGGARD talks to some leading lights in estate agencies about their property predictions for this year
ALTHOUGH the real-estate industry slowed down slightly towards the end of 2006, seen by most as a result of interest-rate increases after July, the consensus seems to be that while things may slow down ever so slightly this year, SA’s property market is still healthy, offering substantial potential for growth.
Berry Everitt, MD of Chas Everitt International, says that SA is no different to many other countries in experiencing a housing shortage, which in turn stimulates the construction industry.
“This is where the activity surrounding preparations for the 2010 soccer tournament impact on the residential market, though: a shortage of labour, materials and skills means that prices of second-hand properties will enjoy upward pressure.
“There is no doubt, however, of the positive impact that 2010 will have across the board, particularly for the property market,” he says.
Patrick O’Shea, CEO of Engel and Völkers, says: “Despite the recent rise in interest rates, we still anticipate another year of 12% to 15% growth in the residential sector. This is attributable to rapidly rising building costs, making the value of existing homes increasingly attractive. As house replacement costs continue to rise, so does the net asset value of existing homes.”
Everitt says: “We must also take note that in 2006, worldwide, there were more 60-year-olds than there were five-year-olds. While AIDS does alter those figures for many African countries, it implies that houses are being used for longer, meaning that turnover of a property is happening far less frequently, affecting the supply of properties to meet demand.”
Andrew Golding, CE of Pam Golding Properties, says increasingly the eyes of the world will be focused on SA.
“From a property perspective, we are already seeing positive spin-offs that will extend for years beyond the world cup, given the huge increased global exposure for the country.”
Golding highlights the weakening of the rand as stimulating overseas buyers’ interest, including that of expatriates considering returning to their home country.
Jacques Bronkhorst, owner of Pulse Realty, is optimistic about 2007.
“We noticed a slowing down of the market towards the end of last year, with fewer buyers around and sellers disappointed in the number of feet going through properties for sale. However, we’ve already seen a 360° turnaround this year so far, with sellers happy at the increased interest shown by buyers. We’re confident the surge in activity, often stimulated by New Year plans and decisions will continue.”
Golding says the Gauteng market is still performing extremely well, and while the Western Cape market has felt the impact of interest-rate increases, it is benefiting from a reduction in the number of speculators.
“The KwaZulu-Natal market is strong and seemingly playing catch-up with the market nationally, and the country’s inland provinces will continue to benefit from a rural environment away from busy city life.”
O’Shea highlights Montague, Ashton, Riebeeck Kasteel and Clarens as hotspots for those seeking to migrate from city hustle-bustle.
“The middle and lower segments of the residential housing market remain the key for investors looking to unlock value. In these segments, affordability and demand will continue to surge and fuel the ongoing growth in both volume and return on investment.”
Bronkhorst has had Pulse’s eye on the township market, having noticed a surge in movement from Soweto towards Johannesburg’s southern suburbs.
“Not only has this stimulated the market in areas like Rosettenville and Mondeor, it has highlighted that property in the townships will enjoy significant turnover as its owners become more economically powerful.”
O’Shea says in the Western Cape, “areas such as Lansdowne, Retreat and Steenberg, which form part of renewal projects directly influenced by the Spatial Development Framework, are being re-evaluated and reconsidered as prime land, as new development objectives initiated by local government will allow for mixed-use developments and integrated living solutions.” .
The nature of the real-estate business is set to change in the next two to five years with the introduction of NQF level qualifications for the profession.
Bronkhorst sees the market toughening for agents, with smaller agencies closing down or amalgamating with bigger, better-known brands.
“This forced commitment to knowledge can only be of benefit to our customers, with increased skill levels sure to dispel negative associations with estate agents in the past,” he says.
Original article published at www.businessday.co.za.
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