Real Estate Clock Predicts Rebound in 2010

The information in the article is courtesy of Property24 (“Residential Market to Rebound Then”, 6 November 2008)

Real estate group, Colliers International (COL), indicated that the South African residential property market will rebound by 2010. This prediction is based on the real estate clock, which was developed in 1933 and demonstrates the cycles and current state of the market.

Sanett Uys, director of Colliers International in South Africa, explain that the property market goes through cycles and follows patterns. This cycle starts with a boom period, moves on to contraction, recession and eventually makes it way through to recovery, expansion, increased funding availability, and back to the boom period. This takes around 7 to 9 years, explain Uys, and each county and city has its own cycle.

She continued to say that while the new mortgage loan granted figures continue to decline, the demand for rental properties are up. She added that the increased cost of property ownership makes renting an even more attractive option.

It has also been noted that property is still a sound option considering certain factors like location. It is also important to see your investment as a long-term one and to understand the external factors that influence the market, among them society, legislation, the environment and the economy, not to mention inflation and interest rates.

Uys suggested that even if a slowdown in residential building completions for 2008/09 is expected, investors should ride out the wave and focus on capital appreciation in 2010.

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