Property market favours savoir-faire buyers

CAPE TOWN (January 25) –

Be-devilled by eight interest rate rises and the uncertainty shrouding a further hike at next Friday’s Monetary Policy Committee meeting has prompted a warning from industry pundits for a cautious approach to the market. Main concern centres around purchasers locking themselves into long-term debt with little room for financially maneuvering around further rate increases, which is a possibility as the Reserve Bank struggles to rein in an already well above target current rate of inflation.

However, while there is a need for caution the current well-stocked market could favour focused on good value, particularly if they utilise the services of leading real estate professionals.

According to Jeanne van Jaarsveldt, Marketing and Finance Director of RE/MAX of Southern Africa, “speculations of a global economic slow-down, even the possibility of a recession, has driven consumer confidence to a state of caution and a ‘wait-and-see’ approach to the property market”.This month, the median house price index issued by a leading South African bank, showed that price growth in residential property had come to a grinding halt at the end of 2007.Additionally, Eskom’s power supply woes will lead to a decline in new property developments. While this may lead to developers seeking eco-friendly ways to build homes, says Van Jaarsveldt, it will not underpin consumer confidence levels.

He adds that this factor, plus dollar-rand exchange rate pressure and the substantial trade deficit in the South African economy, will likely prevent Reserve Bank governor Tito Mboweni from issuing another interest rate hike at the upcoming Monetary Policy Meeting.Van Jaarsveldt continues: “This year will become an even stronger buyers’ market than we anticipated in 2007, and crucially we will continue to see property prices sell between 10 percent and 15 % below the original asking price for properties listed towards the end of 2007.

“Consumers in a rush to sell should list at 10% below of what they hoped to achieve in December last year. “The good news is that it is a great time for first time home-buyers to enter the market, with the unique balance of affordability and strong value making this foray into real estate a brilliant proposition.”