SA house prices show re­cov­ery as World Cup fever kicks in

Weekend Argus (Saturday Edition) - - NEWS -

ment to­wards South African prop­erty in­ter­na­tion­ally.

At the time, Saul Gef­fen, manag­ing di­rec­tor of ooba (for­merly Mort­gageSA), an­a­lysed how ma­jor global sports events like pre­vi­ous World Cups and the Olympics had in­flu­enced prop­erty mar­kets in other coun­tries.

“Paris prop­erty prices es­ca­lated by as much as 55 per­cent over a one-year pe­riod be­fore and af­ter the 1998 World Cup and prop­er­ties across the city made astro­nom­i­cal gains with apart­ments close to some of the sta­dia rock­et­ing by over 100 per­cent over the same pe­riod.

“We ex­pect the same sort of phe­nom­ena will hap­pen in SA de­spite the mar­ket’s good run.”

Gef­fen said that host­ing the Olympic Games or World Cup en­cour­aged city re­gen­er­a­tion and was usu­ally ac­com­pa­nied by an im­prove­ment in fa­cil­i­ties and trans­port links.

“Prop­erty prices in Athens, Syd­ney, At­lanta, and Barcelona, all got a boost as new trans­port and sport­ing fa­cil­i­ties spurred re­gen­er­a­tion plans and pushed them ahead of ri­val cities.

“On av­er­age, th­ese four Olympic cities out­per­formed the na­tional mar­ket by 19 per­cent­age points in the five years lead­ing up to the games, but in Barcelona the im­pact was even greater. Prices there raced ahead by 131 per­cent com­pared with 83 per­cent na­tion­ally to open up a 49 per­cent price gap over other Span­ish cities. In Syd­ney the dif­fer­en­tial was 11 per­cent, in Athens 9 per­cent, and in At­lanta 6 per­cent,” Gef­fen said.

Gef­fen’s brother Barack, ex­ec­u­tive di­rec­tor of Sotheby’s In­ter­na­tional Realty in South Africa, agreed.

Un­luck­ily, how­ever, a global re­ces­sion which took hold in the lat­ter part of 2008 has en­sured that the Gef­fen broth­ers’ pre­dic­tion had al­most no chance of com­ing true.

But al­though the 2005 fore­casts are un­likely to bear fruit – es­pe­cially af­ter SA home­own­ers and house hun­ters were hit with an ad­di­tional stum­bling block in the for m of the Na­tional Credit Act, which saw banks tight­en­ing lend­ing cri­te­ria – it is not all doom and gloom in 2010.

This week, Saul Gef­fen said his com­pany’s lat­est statis­tics in­di­cated a con­tin­ued im­prove­ment in the res­i­den­tial prop- erty mar­ket and sug­gest that the re­cov­ery will con­tinue to be grad­ual, rather than spec­tac­u­lar.

He said ooba’s price in­dex recorded a 1.8 per­cent in­crease in the av­er­age house pur­chase price over the 12 months to De­cem­ber 31, 2009 – from R854 029 to R870 051.

“The lat­ter part of 2009 saw a steady im­prove­ment in the res­i­den­tial prop­erty mar­ket.

“We ex­pect this trend to con­tinue and pick up pace into 2010 as the eco­nomic en­vi­ron­ment im­proves and banks fur­ther ease up on their lend­ing cri­te­ria.”

Al­though the coun­try’s real es­tate sec­tor is gen­er­ally re­garded as cau­tious at the mo­ment, a fi­nan­cial mag­a­zine re­ported the Frank Global House Price In­dex has listed South Africa as the six­th­fastest grow­ing hous­ing mar­ket in the world.

The Bri­tish-based prop­erty group tracks house price growth in 42 coun­tries across the globe. The re­port said the re­cov­ery in global house prices was well un­der way, with 23 coun­tries re­port­ing growth.

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