Some Positivity for SA Property Market

Property Sales on the Up

Tony Clarke, managing director of Rawson Properties has reported a dramatic improvement in property sales recently. He went on to say that all players in the residential sector have been watching the economic indicators because it is an historic fact that an upswing in the economy usually sets in motion a rise in property prices. However, while we all may be desperately in need of this to happen, Clarke believes that it is still not quite here yet.

The economy took a marked upturn in the second quarter of this year, growing by 4.9% quarter on quarter after a dismal growth of just 2.1% in the previous quarter. However, this should not be taken as an indication that we are now in a strong economic period. The improved figures have to be considered in context with those of the first quarter, in which the mining and manufacturing sectors have been hit hard by the Eskom crisis and exceptionally high fuel prices.

The second quarter of the year has seen power supplies more constant and fuel prices have finally starting to fall, while prices in the agricultural sector have been bolstered by the sudden upturn in global prices around the world. Although this is not likely to become a permanent phenomenon, low food prices are now generally a thing of the past.

While the improved second quarter was a welcome relief, weaker growth is now expected throughout the latter half of this year. Industries in the consumer market, the financial sector and real estate development will continue to function well below their 2007 peaks. Even those who did quite well on the back of a weaker rand will feel the effects of considerably reduced commodity demands in the last half of the year.

When it comes to property, Clarke remains positive and has said publicly that with interest rates likely to be stable from now on, the residential sector is set to bottom out. He believes that prices will stop falling within the next two or three months and by January there will be real growth creeping back into the market. Currently, Rawson Properties has seen a dramatic increase in market activity, up to 35% month on month. That being said, this is an extremely good time to buy for anyone looking to build up a useful buy to rent property portfolio in the residential sector.

The information in this article is courtesy of Tony Clarke (“Dramatic improvement in property sales – estate agency”, Realestateweb, 11 September 2008).

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