PROPERTY: 2010 Kicks Off To A Positive Start
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The arrival of 2010 and the much anticipated Soccer World Cup together with the first signs that South Africa is moving out of recession bode well for the country’s beleaguered property sector over the next 12 months, according to Samuel Seeff, chairman of real estate giant, Seeff Properties of Cape Town.
A “cautiously optimistic” Seeff believes that this year will bring good news - increased demand for property, more sales as well as conservative price increases. “We will see more activity and more demand which will translate into more sales provided that banks keep their doors open to providing more finance,” he pointed out.
Looking back, Seeff said from June 2007, the property sector had had two years of bad news. The fallout from the National Credit Act and more stringent lending criteria, continued hikes in interest rates, rising inflation and the escalating effects of the global financial crisis during 2009 all contributed. “Demand for housing slumped to low levels and prices dropped, resulting in massive attrition of thousands of agents.”
This all affected liquidity and confidence and, as such, sentiment. The market reacts to sentiment. People are reluctant to make long term commitments,” he pointed out.
During last year’s economic crisis, banks tightened up on lending, demanding larger deposits and granting fewer and fewer loans which had had an extremely negative effect on sales, according to Seeff. As a result, the full impact of interest rate reductions that began in 2008 and continued to August 2009 are yet to be fully felt.
He said the initial interest rate cuts had taken about 5 months to begin to filter down into the market. Activity levels and turnovers remained way off those recorded during the property boom of three years ago and positives were yet to increase buyer activity to the point where there was no longer surplus stock in the market. “Only once demand exceeds supply can we expect to see a more rapid increase in property prices. Until that happens, we will see minimal growth,” he pointed out.
“Overall, we believe the 2010 Soccer World Cup will have positive effect on sentiment rather than actual sales. The real effect may only be felt in 2011. By placing South Africa in the spotlight, it will certainly open up the country to potential investors and buyers who cannot help but recognise that there is significant value in the cosmopolitan lifestyle we offer, when compared to European destinations. Luxury homes and villa’s on the platinum strip which includes the world renowned areas of Camps Bay, Bantry Bay and Clifton as well as apartments and penthouses at the equally enviable V&A Waterfront still offer good value for the many overseas visitors who find South Africa an appealing holiday destination," Seeff says.
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