‘No reason at all for gloom in SA residential market’
IS THE South African residential property market in dire straights, or is it experiencing a steady recovery with exciting prospects ahead?
Those who attended the We s t e r n C a p e I n s t i t u t e o f E s t a t e Ag e n t s ’ e n d - o f - ye a r breakfast recently were told by Lanice Steward, MD of Anne Porter Knight Frank, that the pessimistic outlook is definitely not warranted.
Steward acknowledged that in 2009/2010 the number of South African estate agents had dropped from 95 000 to 36 000, and few recent years had been more difficult than 2010.
But, she said, the institute’s new PropStats division showed that year-on-year sales in the Western Cape had increased by about 56 percent – 3 924 for 2009 and 6 117 for 2010.
“These figures are, admitt e d l y, n o t c o m p r e h e n s i v e because the new division was capturing less data in early 2009 than it is now. But even if you allow for a 50 percent cut to reflect this, the 28 percent increase would be a major achievement in any analysis.”
She said the pessimism probably stemmed largely from data revealed by major banks indicating that nominal average prices had been declining for about six months.
“It should be remembered that the high point they achieved before the downturn began in 2008 was exceptionally high – so much so that even then economists were asking if it was sustainable.”
She said PropStats’ data for t h e We s t e r n C a p e a l r e a d y showed a rise in annual sales from R7.8 billion to R12.5bn. Again, even allowing a big discount for growth in PropStats’ data capturing, the figure was “very impressive”.
“Particularly encouraging has been fast, continual growth in the prices recorded by FNB in Khayelitsha and Gugulethu – 29.7 percent in 2007, 18.7 percent in 2008 and 14.2 percent in 2009 – figures probably matched in other big Cape townships.”
Steward war ned sellers against over-pricing.
“The World Cup killed the residential housing market for two or three months, but it can be hoped that it will lead to a big influx in tourism and foreign investment over the next two years, to the benefit of the housing market.”
Steward suggested the property market could be boosted by South Africans returning from Britain as a result of the UK’s economic difficulties and its clampdown on employment of foreigners. The three percent growth rate likely in South Africa in the coming year was also an attraction.
“Cape Town still represents some of the most desirable property in the world, and the property industry here can look forward to sustained growth in the coming years.”