Year ahead looks rosier for property market

Posted On Thursday, 06 January 2011 02:00 Published by eProp Commercial Property News
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Estate agents have painted a rosier picture for the residential property market this year, but have warned prices are being held down by banks’ strict lending criteria.

Berry Everitt

Berry Everitt, CEO of the Chas Everitt International property group, said yesterday that home price growth would pick up again towards the middle of this year, but would be constrained until banks became more lenient.

"I do think that this (the housing market) will be constrained below 10% unless the banks become quite a lot more lenient, which is going to take time because household debt levels are still high and they are still dealing with quite a large number of distressed sales," Mr Everitt said.

He said the market had "excellent opportunities" for investors who could afford to buy additional properties, with the best buys being in popular coastal locations.

Jan Davel, MD of the RealNet estate agency group, said the residential property market had several factors in its favour this year, including exceptionally low interest rates, slower than expected consumer price inflation and decreasing levels of household debt.

Low interest rates were helping the property market by putting extra money into "household piggy banks" and boosting the demand for credit such as home loans, he said.

"Over the past few months this has already been evident in an increase in home sales activity that will no doubt continue if there is another rate cut early in the year, which many economists are predicting," Mr Davel said.

Property professionals and consumers, however, still had to be cautious and patient, according to Mr Davel.

"We are not going to see another boom period like 2003 to 2006 anytime soon.

"The market is going to take some time to recover, and we don’t foresee a major upswing in 2011 or even 2012."

Lew Geffen, chairman of Sotheby’s International Realty in SA, said he was "bullish" about this year’s prospects for the market in which his company operates, where the average sale is about R2.5 million.

"The market has really bottomed out now, lending has loosened up somewhat and pent-up demand among those looking to upgrade is starting to come through."

Apart from access to finance, Mr Geffen expected the two major market drivers to be property operating costs and "convenience".

Last modified on Wednesday, 12 March 2014 10:10

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