The year is starting with strong indications that the economic emergency measures taken last year have by and large been successful, says Martin Schultheiss, chief executive of Harcourts Africa.
“However, caution still prevails and economists are divided on the sustainability of the recovery and the prospects for economic growth in 2010. This is of course good news for serious home buyers and property investors, because as long as there is this uncertainty, central banks will tend to keep interest rates down and make it easier to afford new purchases and easier to qualify for home loans.
“Once the world economy does return to higher growth rates, the banks are likely to start increasing rates again to curb inflation, which will put limits on the buying opportunities that are currently evident – and limit the chance for consumers to benefit from the expected 25% to 30% increase in property values over the next three years.”
As for the property market itself, Schultheiss foresees the following in the year ahead:
Interest rates are at a 28-year low and unlikely to drop much further. In fact they will probably start to rise again at the end of the year. The next few months will be the best time for home buyers to obtain loans, and could be a good time for existing borrowers to fix their rates.
More people should be able to afford property this year as consumers continue to pay off debt and salaries start to increase in line with greater economic growth.
Population growth, economic empowerment and increasing prosperity will also stimulate demand among owner-buyers in established markets. However, stringent home loan qualification criteria will ensure that the rental market stays active and strong, and this will encourage investment.
New residential property markets will continue to be opened up by mining and industrial ventures, tourism and infrastructural development, and activity will be less concentrated in the main metropoles. Some speculation is likely to be evident in these new markets.
Security and personal safety will remain major considerations and more buyers are likely to choose homes in gated villages and estates. This will emphasise the importance of good legislation to regulate sectional title and community living and resolve disputes quickly and cheaply.
Buyers and sellers will increasingly expect and demand outstanding service from agents, and the property industry will have to invest heavily in more and better training as well as more user-friendly websites.
*At the same time, transformation will be top of mind in the industry and it will become more representative, with an increasing number of black agents operating in the mainstream and not just in the former townships,” says Schultheiss.
