In­vestors turn to prop­erty

Weekend Argus (Saturday Edition) - - PROPERTY -

THE IN­VEST­MENT po­ten­tial of prop­erty is beginning to look de­cid­edly more pos­i­tive this year, says Ger­hard Kotzé chief ex­ec­u­tive of ERA South Africa.

Kotzé says the mar­ket has “def­i­nitely bot­tomed-out” and “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”.

In the third quar­ter of last year, gross do­mes­tic prod­uct (GDP) rose 0.9 per­cent 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 2.6point rise in Septem­ber. This in­di­cat o r c o mbine s s eve r a l mea­sure s i ncl ud­ing man­u­fac­tur­ing hours worked, new build­ing plans ap­proved, ve­hi­cles sold as well as share and com­mod­ity prices, and is re­garded by economists as a re­li­able fore­caster of the econ­omy in six to nine months’ time.

“Fol­low­ing th­ese de­vel­op­ments, economists are pre­dict­ing that nom­i­nal house prices will rise by 10.8 per­cent in 2010, fol­lowed by 12.1 per­cent in 2011 and 12.7 per­cent in 2012.

“In nom­i­nal terms, house prices should rise by 30 per­cent or more over the next three years – a far cry from the huge an­nual in­creases we had at the height of the last prop­erty boom, but an in­di­ca­tion of a health­ier, more sus­tain­able mar­ket.”

Kotzé says signs at the “coal­face” al­ready in­di­cate the chang­ing mood, with in­creased de­mand across the price spec­trum. But there are still prob­lems with avail­abil­ity of bank fi­nance, he says.

“ Me a n wh i l e , i nve s t o r s h ave 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. How­ever, their com­pet­i­tive­ness with ex­ist­ing prope r t i e s c o u l d b e j e o p a r d i s e d by un­war­ranted in­creases in build­ing ma­te­rial costs.”

He ad­vises buy­ers to en­sure any pur­chase is viewed as a medium-to long-term in­vest­ment of five years or more.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.