The arrival of 2010 and the much anticipated Soccer World Cup together with the first signs that South Africa is moving out of recession bode well for the country's beleaguered property sector over the next 12 months, according to Samuel Seeff, chairman of South African real estate agency group, Seeff Properties.

A "cautiously optimistic" Seeff believes that this year will bring good news - increased demand for property, more sales as well as conservative price increases. We will see more activity and more demand which will translate into more sales provided that banks keep their doors open to providing more finance.

Looking back, Seeff said from June 2007, the property sector had had two years of bad news. The fallout from the National Credit Act and more stringent lending criteria, continued hikes in interest rates, rising inflation and the escalating effects of the global financial crisis during 2009 all contributed. Demand for housing slumped to low levels and prices dropped, resulting in the massive attrition of thousands of agents."

This all affected liquidity and confidence and, as such, sentiment. The market reacts to sentiment. People are reluctant to make long term commitments.

During 2009's economic crisis, banks tightened up on lending, demanding larger deposits and granting fewer and fewer loans which had had an extremely negative effect on sales. As a result, the full impact of interest rate reductions that began in 2008 and continued to August 2009 were yet to be fully felt.

The initial interest rate cuts had taken about 5 months to begin to filter down into the market. Activity levels and turnovers remained way off those recorded during the property boom of three years ago and positives were yet to increase buyer activity to the point where there was no longer surplus stock in the market. Only once demand exceeds supply can we expect to see a more rapid increase in property prices. Until that happens, we will see minimal growth.

Overall, we believe the 2010 Soccer World Cup will have a positive effect on sentiment rather than actual sales. The real effect may only be felt in 2011. By placing South Africa in the spotlight, it will certainly open up the country to potential investors and buyers who cannot help but recognise that there is significant value in the cosmopolitan lifestyle we offer, when compared to European destinations. Luxury homes and villa's on the platinum strip which includes the world renowned areas of Camps Bay, Bantry Bay and Clifton as well as apartments and penthouses at the equally enviable V&A Waterfront still offer outstanding value for the many overseas visitors who find South Africa an appealing holiday destination. In fact, we have just sold a Camps Bay villa for the highest price ever fetched in that area, to a European executive who owns an international brand, who was in Cape Town for the draw on the 4th, looking for somewhere to rent for the duration of the tournament. On experiencing Cape Town for just a few days, he decided to purchase here instead.

Coastal property gems are certainly not restricted to the platinum strip - one can purchase a four bedroomed mansion alongside the links at Sunset Beach on the western seaboard coastline, which offers post card views of table mountain and the ocean, for between R10 and R12 million, and equally outstanding homes are to be found in the coastal towns of Hout Bay and False Bay.

Commenting on the company's results: In July, the group recorded its best performance year on year since March 2008.

"The Group's July 2009 sales figures were up 30% from July 2008. This performance proved sustainable and Seeff Properties clocked up a massive 107 percent increase in turnover in October 2009. The number of units sold during this period was 133 percent higher than the number of units sold during October 2008.

In fact, as of December, we've shown significant increases every month compared to the same period, month on month, over 2008.

The fact that financial institutions are now easing up on their stringent lending criteria and are granting more loans coupled with the fact that South African household debt has dropped and consumers are better able to service loans, suggests this will continue into 2010. We noticed buyers begin to return to the market from mid 2009 and I believe that at the end of 2009, we certainly hit the bottom of the market.

With increased sales activity and banks easing up on the loan to value criteria, the property market will be a lot stronger this year.

We now believe sentiment has improved to the point where buyers are more willing to commit. There has been a steady flow of requests for us to market properties on behalf of sellers. We attribute this to the fact that many sellers have been holding off from the market in anticipation of price increases. Sellers are now reacting to increased buyer activity.

One real positive that had emerged from all the negativity was that both buyers and sellers had become more aware of conditions in the property market and the true values of their assets.

Article from: www.realestateweb.co.za