How is the Stock Market Affecting Residential Property?

The information in this article is courtesy of Saul Geffen and Samuel Seeff (“Stock Market Woes: Good or Bad for Residential Property?”, Realestateweb, 14 October 2008)

Realestateweb reports:

Two leading property figures are divided over whether the world stock market is having a good or bad effect on residential property.

Saul Geffen, chief executive officer of Ooba (one of the country’s leading mortgage originators), is of the opinion that stock market woes could boost property.

He said that recent events are likely to lead to investors looking at property as a safe investment after losing confidence in shares and banks. Property is something you can touch, see and feel. This and the fact that it can’t be taken away from you, make it a safe investment with the possibility of a worldwide recession looming.

Geffen added that the bargaining power of cash will put cash buyers in a strong position to snap up property but other investors will also put their trust in the safety of property investment.

According to Geffen the positive effect can already be seen in the average purchase price in September jumping 2.4% from August. This brings the price rise since July to 1.6%.

Samuel Seeff, chairman of Seeff Properties does not share Geffen’s optimism on this point. He expects the current financial troubles to have a negative effect on the residential sector, resulting in buyers being more cautious.

Seeff warned that an anticipated recovery in the market early next year would be delayed due to the global financial crisis. He added that more and more investors would choose to wait and see how the collapsing of the US financial instituitions will affect the market.

Seeff insisted that a recovery in the market is still certain but added that there is undoubtedly a concern on how our banks’ liquidity is affecting the granting of loans.

According to him, one out of two bond applications are being rejected since the inception of the National Credit Act,


Property for sale in South Africa