Profitable year for property players in SA

Good conditions in the residential property sector likely to persist for foreseeable future

LAST year will go down in South African property history as one of the better years, in which demand increased, conditions became easier and citizens regained some of their former confidence in property as an asset class, says Bill Rawson, chairman of the Rawson Property Group.

He believes the improved conditions of the past 12 months were at least partially the result of the lower interest rates, and the Reserve Bank’s continued reluctance to raise them significantly, and of the relatively poor or fluctuating performances of many other asset classes, especially those related to the money market.

“Although it is true that the better performing asset managers could still achieve 20 percent or even 25 percent returns for their investors, many of the more cautious investors came back to property because it’s a more stable asset and one that gives investors a more direct, hands-on involvement,” says Rawson.

“This increased confidence in property enabled the sector to ride out some of the difficulties caused by the banks and financial institutions imposing tighter lending criteria – but this remains one of the major obstacles to fast growth in residential property.

“As had been predicted for some time, many national agencies significantly increased turnover and in most cases gained significant market share. The higher sales turnovers were due to more franchises being established and improved efficiencies. Also boosting turnover, was the 6 to 10 percent increase in residential property values.”

Rawson says the major challenge in many areas a few years ago was to find buyers for too many properties, many of which were overpriced despite the surplus on the market. Now the challenge is to find stock for buyers who are sometimes growing frustrated and impatient and who all too often are reconciling themselves to becoming renters for life.

“The residential property market is now a victim of its own success: those who in the units and is in the process of handing over homes in one major development The Beaumont, in Claremont. Rawson Developers is launching two six- and seven-storey projects.

In all the big cities’ suburbs, he says, there are welcome signs of cleverly designed, reasonably priced sectional title projects becoming available on a scale not seen for some years.

He says a career in property is now increasingly acceptable to people with other business experience and tertiary qualifications. Nevertheless, the service levels in many sectors of the residential property world are still less than satisfactory.

“Professional and competent agents are reaping the rewards by handling the lion’s share of the business. It is high time that the average age of agents is reduced and younger people are recruited to this sector. Obviously, in the long run empowerment of agents from disadvantaged communities will help, but as many others have pointed out, the barriers to these people entering the property world are high.

“Novice agents require ongoing mentoring and must have sufficient reserves to survive a year without an income.”

Looking ahead, Rawson says it now seems probable that, although house price growth will remain in singledigit figures, sales and t u r n o v e r s i n a l l ma j o r provinces should increase by 12 percent to 15 percent in 2015. “Because there is absolutely no sign of an easing up in demand, any investment made in the next few months in property is likely to be a good one.”

‘Many of the