Housing "Crash" reports are not realistic

Another senior executive in the residential property development, marketing and financing sector, Anthony Smook, MD of A Mortgage Loan, has come out with a statement that he is “mystified” by the negativity and pessimism of recent media reports on the industry.

“I, for one, simply cannot understand on what facts the current gloomy outlook is based,” said Smook. “It seems to me that most people’s opinions on housing are the result of rumour and dinner talk.”

Smook said that A Mortgage Loan consultants are closely in touch with the residential property market and know to within a few percentage points how housing prices perform.

“Right now,” he said, “there is statistical evidence pointing to a marked stabilisation in prices but in none of the areas in which we work (Western Cape and George) do I see any signs of an actual downturn. Price rises are now either negligible or nonexistent but I cannot think of a single sale where the seller has actually lost money.”

Investors with cash, said Smook, are now climbing in because rentals are rising and they expect the market to rise by the end of 2009 and because, too, many developers of new units are now offering exceptionally good deals – price cuts, guaranteed rental incomes for specified periods and guaranteed buy-back deals in which the developer will repurchase the unit in one to three years at the cost price if the investor feels it has not performed satisfactorily.

Smook drew attention to a prediction by Tony Clarke, MD of Rawson Properties, in which he said that he is banking on a 50% price rise in residential property by the end of 2012.

“I accept that estate agents have a reputation for talking up the market,” said Smook, “but that sort of expectation is still widely held in our property sector and I can see no reason to distance myself from it. Power cuts, high interest rates, high inflation, high unemployment, Zimbabwe and a flagging world economy are all factors which can be turned round in due course. The plain truth remains – in SA, housing is still a good investment.”

Article by: Anthony Smook - www.amortgage.co.za