Bill Rawson still sees signs for hope
South Africa is unlikely to see another residential property boom in the foreseeable future and a full-scale revival in residential property is probably two to three years off, says Bill Rawson, Chairman of Rawson Properties but, he adds, the turnaround point and the beginning of the upswing have already been reached and several encouraging signs are now already evident.
The first of these, said Rawson, is that the US economic indicators are pointing to the official recession coming to an end in the third quarter of this year. This, he said, means that South Africa, which traditionally lags six months behind the US, could find itself in a far better position by March/April 2010.
The second helpful indicator, said Rawson, is that the banks are very definitely now beginning to loosen up on their attitude towards bond applicants.
Whereas before, at one stage, they simply did not look at bonds, now they are open to discussion. It seems that they have gained confidence from the lower interest rates and the more positive scenario that this has ushered in. At Rawsons, we too are seeing signs that
Most importantly, sellers are now genuinely adjusting to the real world, not setting mythical prices.
Rawson said that interest rates are bound to drop further (by up to 1% this year) and this will widen the property buying market.
The current problems, he said, have resulted in almost 60 000 agents countrywide having to leave their jobs and in many agencies amalgamating to cut overheads. As a result, he said, the bigger Rawson franchisees have been able to recruit some highly skilled staff who are definitely capable of raising the standards wherever they work. Rawsons had also, he said, witnessed a number of independent agencies applying to become Rawson franchises.
This suits us because now that franchisees have to be fully qualified, it is very difficult to sell a franchise to an unqualified buyer, he said.
A particularly hopeful indicator, said Rawson, is that the Zuma cabinet now has a Ministry of Settlement, headed up by a man, Tokyo Sexwale, who, on the face of it, has all the right credentials for the job: a track record of delivery, a willingness to involve the private sector and a successful business management background.
The official backlog on housing is now two million units but the real figure could be well over five million, said Rawson. A minister determined to crack this problem could, we believe, easily build two million homes or more within the next three years. Should that happen the entire economy will benefit: the spin-offs, particularly for increased employment will be huge and the greater stability and prosperity of the recipients will also boost the economy.
Repeating a message he has put out regularly in recent weeks, Rawson said that the combination of lower interest rates and ultra-low prices make this an exceptionally good time to get into property.
What those new to property purchasing have to appreciate is that those of us who have been around for 30 years have seen much of this before and we are not too fazed. The 1992 recession produced conditions that in many ways were worse than those now evident but homeowners and the good agencies came through. What we have learned from these previous experiences is that property always survives the storm better than most other classes and that we ourselves learn to operate leaner and more efficiently.
Accepting, therefore, that the next interest rate rise is still over 18 months away, now is the time to build a property portfolio.
Article by: www.rawsonproperties.com