Country’s property market in a ‘cocoon’
Prices set to grow at 7% this year
SOUTH Africa’s residential property market was in a “cocoon” and outperforming the general economy, Seeff Properties chairman Samuel Seeff said yesterday.
Seeff said residential property prices were growing year on year by about 7 percent in 2015, while the mining, retail and tourism sectors were showing a downward trend and the country’s gross domestic product was growing at a maximum of between 1.5 percent and 2 percent.
“I chose the word ‘cocoon’ carefully because it’s not in a ‘bubble’. The market is nowhere near that,” he said.
Seeff was speaking at the announcement of a strategic residential property referral partnership with Hamptons International of the UK, the major international brand for the London Stock Exchangelisted Countrywide Group, which claims to be the biggest single residential property business in the UK.
Balanced
Seeff said the South African residential property market was relatively balanced and there were sufficient buyers and sellers in the market, although there were shortages of stock in many areas.
This meant well priced properties coming on to the market would sell within two to four weeks, compared with the three-and-a-half to four months average time a property remained on the market before being sold, as determined by First National Bank.
But Seeff stressed the property market was likely to still remain in its “cocoon” for a long period and there was a need to be cautious and aware of interest rate rises. But he believed future interest rate hikes would be less frequent and lower than expected.
Seeff expressed concern about the lack of confidence not only in the residential property market, but in the general economy. He said Cape Town and certain spots of the Atlantic Seaboard seemed to be the exception to the rest of the property market, particularly in the upper end of the house price category.
One of the drivers of the lack of confidence was the sharp depreciation in the value of the rand.
One of his agents had just confirmed a property sale in the Atlantic Seaboard for R48 million and another property in this area was sold earlier this year for R111m.
But Seeff said the lack of activity in the R15m plus market in the Johannesburg region was concerning. “The people do have the finances, but at that level they are either looking to purchase in Cape Town or look to take some money offshore, which does not bode well for us,” he said.
Seeff said one of the drivers of the lack of confidence was the sharp depreciation in the value of the rand and hoped there would be some reversal in the decisions taken about visas that would boost tourism and result in renewed interest in residential property from foreigners.
Foreign buyers
Seeff is hoping to get more foreign property buyers through the partnership with Hamptons International, but found it ironic that as the rand weakened, they got people who wanted to try and buy a property internationally.
Alisdair Hedley, the head of Hamptons International, said Hamptons through their strategic partnerships worldwide represented more than 150 000 international homes. “There are undoubtedly tremendous and infinite opportunities for us to connect our real estate markets further and leverage our networks,” he said.
Hedley said there were almost 400 000 South Africans living in London and a further 100 000 South Africans living in the rest of the UK.
About a third of South Africans living in the UK owned their own homes and bought properties both in the UK and in South Africa, particularly at the favourable exchange rate.
“In 2014, there were as many buyers in the UK from South Africa as there were from the US,” he said.