Strong rally in R5m-plus cash buyers

Dr Andrew Golding, chief executive of the Pam Golding Property group, gives his views on the state of the real estate market - and his own business:

Whatever the outcome of the current inflation figures debate, we sincerely hope that the forthcoming meeting of the Monetary Policy Committee does not see the necessity to implement a further increase in the repo rate, as this will undoubtedly have a further negative effect on growth, amid already high fuel, food and electricity costs, coupled with the fact that the manufacturing and retail sectors are experiencing a significant slow-down.

The residential property market is one which is markedly affected by general sentiment, so it's unfortunate that there is talk of a recession when as a country we are still achieving growth of over three percent for the current year, and are also seeing major investment in infrastructural projects, including preparation for the 2010 Soccer World Cup and significant investment in expansion by Eskom and in the country's logistics network. South Africa is also experiencing a soaring demand in global markets for its commodities, specifically minerals and metals. From a global residential perspective we are most fortunate not to be in the midst of a sub-prime situation as experienced in the United States, and while the National Credit Act has negatively impacted lending in South Africa it has played a key role in preventing further over-indebtedness among consumers. And while interest rates are at higher levels, they are nowhere near the 25 percent highs we experienced just over a decade ago.

We are noticing a number of interesting and positive trends in the residential property market within different segments around the country, for example ongoing investment in homes here among South African expatriates living in various countries overseas and a strong rally among cash buyers, particularly in the R5m and upwards price range. There's also a good demand for homes - particularly those in cities and towns with quality schooling and universities and offering a more secure way of life.

We continue to see a trend among city dwellers in general seeking a more tranquil lifestyle in country towns - some starting new businesses or working from home, those retiring, and others choosing to commute to work in major centres weekly. And we see the start of an upturn in rental yields as a positive indicator for the residential property market in that it will encourage investment in property. It is a truism that it is dangerous to generalise particularly when commenting on the property market except to say that it remains diverse, dynamic and ever-changing. A fundamental however, is the broad based awareness of the sound medium to long term benefits of owning one's own home. While the current stabilising of prices was inevitable - following the unprecedented returns of the recent boom times - a natural slow-down in price appreciation does contribute towards bringing home ownership within the reach of aspirant home buyers.

As a group PGP has undergone significant growth and expansion since the start of this century, from turnover of R3 billion in 2000 to R21 billion over the past financial year (ended February 2008). The company will continue to focus on strategic core areas of the business in order to ensure that it upholds its leadership position in conducting transactions on behalf of sellers and buyers, and in realigning itself in order to capitalise on new market segments and opportunities. We are already investing heavily in the next three years in training our agents in not only meeting but in exceeding the requirements of the new national curriculum for education and training, as well as an additional capital investment in staff training at all levels. We will also continue to invest in IT and marketing innovations which will ensure maximum exposure for client's properties across a broad range of media.

Article from: www.sapropertyinvestor.co.za