GDP data showing the South African economy has moved out of recession and has recorded positive growth for the third quarter of 2009 is expected to cause a bounce in property prices, asset sales and services company Alliance Group said Tuesday.

Alliance Group Chief Executive Rael Levitt said auction floors across the country have been revealing that since the beginning of the third quarter of 2009 asset prices are rising and frozen commercial and residential property markets are now quickly thawing.

"Today's news that the South Africa's economy has moved out of recession and has recording positive growth for the third quarter of 2009, has been experienced firsthand by us and there has been a sharp downturn in distressed residential sales since June," Levitt said.

As the host nation of the Fifa World Cup, "We are already experiencing a bounce in optimism and thus property values," adds Levitt.

A recent report released by Alliance Group showed that in the third quarter there were some strong signs of increased sales activity in commercial and residential property, but that the sales market is still far quieter than a year ago.

According to the report, bank's stricter lending guidelines have constrained the market coupled with increased concerns about tenants.

According to Levitt, "Investors who can raise financing or have access to cash are now looking for value in anticipation of a rebound in commercial and residential property values over the next 12 months".

According to the report there has been a bottoming out of sales confirmation rates over the last 8 months with a marginal decrease in the reserve sale price variance.

"Both these indicators suggest an improvement compared to early 2009," says Levitt.

Overall, while there appears to be increased activity in the market, commercial property sales at auctions performed well below August 2008 figures just before the international credit crises began.

Illustrative of how quickly sentiment has changed is the view of Levitt, who was a self-confessed bear regarding commercial and residential property market at the end of 2008.

"I have changed my mind," he now says. "I have moved from deeply bearish to optimistic. "At the very least there will be a short-term squeeze on capital values but South Africa will see a big bounce in 2010".

Source: I-Net Bridge