THABANG MOKOPANELE

Property Editor

Alliance Group CE Rael Levitt said although the Soccer World Cup was expected to bring great benefits, the property market, still burdened by debt, faced a long and hard slog. “The property market is indeed in a period of a slow, weak and dull recovery.”

While the World Cup would boost sentiment, and likely produce a bounce in high-value residential properties, “it unfortunately won’t be a magic pill to quickly relieve the downturn”, Levitt said yesterday.

He predicted that the market would in the first half of the year experience more liquidations and insolvencies than before.

“A sweet spot may emerge for estate agents and auctioneers if buyers are buoyed by positive World Cup sentiment, but sellers who are mildly distressed will accept realistic prices.

“I truly hope that certain agents don’t create hyperbolic euphoria around the World Cup and create a situation where sellers start asking unrealistic prices, thinking that soccer fans are heading to SA on property shopping trips. This will kill sales.”

Levitt said the second half of the year could well be more challenging.

“While we don’t believe that there will be a major post-World Cup hangover, reality may well set in for certain property players. House price growth threatens to be limited for the next year because of the damaging legacy of the last two years,” Levitt said.

“The last decade led to large house price inflation. As banks have become relatively sober in mortgage lending, the complications left by the last decade’s property boom will be with us for a while,” he said.

Turning to the auction industry, Levitt said auctions would grow as new entrants joined an increasingly competitive space.

As a result of this growing competition, auctions would see further growth this year as the industry gained more acceptance as a first-choice method of sale.

Distressed property sales would still be coming to the auction floor for most of the year, Levitt predicted.

“For most property players, the past year has been first and foremost about short-term survival,” he said, adding that the outlook for this year, while still mild, was “far better” than last year when people tightened their belts to deal with the weak economy and growing unemployment.

“In 2010, people will start spending more as the stock market continues to rally and the economic outlook improves. Keeping the show on the road over the last 18 months of turmoil has been a true test for many developers, brokers and banks,” he said.

This year the challenge would be to refocus on the long term and what the post-World Cup period would bring. People would see for the first time that SA was closer to Argentina and Malaysia than to most other African states.

“The first half of the year until the 11th of June will see our country showcasing its beauty and its assets - to an accumulative audience of some 30 billion people. One cannot underestimate the impact of the World Cup. Our cities will very shortly be hosting the world’s most spectacular global event”.

The world cup would be a chance to showcase SA, and, despite high levels of crime and a still shaky economy, the country would prove the sceptics wrong, he said.

Levitt said the world would for the first time see that SA was in many ways closer to Argentina and Malaysia than to most African states. Preparations for the event had already uplifted the economy through infrastructure projects.

According to Levitt, for the first time the world would see that SA was in many ways closer to Argentina and Malaysia than it was to most African states. Preparations for the world cup had already given a boost to the economy through infrastructural spending.

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Source: Business Day