SA house prices show recovery as World Cup fever kicks in
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.