Is the housing sector recovery a reality

Talking on the subject recently, Louis Taljaard, National Expansion Manager for Rawson Properties (who is tasked with setting up new franchises for the group in six provinces), said that in Gauteng there is now clear evidence of a revival.

“Every show house is well attended. In our group the number of Gauteng bond applications has risen in one year by 35%, sales are ±12% up and the prices are now stabilising,” said Taljaard.

He warned, however, that Gauteng sellers should not yet try to achieve 2007 prices.

“We still have a big deficit to make up. Prices have risen recently – but that was from a lower base than the peaks of 2007.”

It can now be expected, said Taljaard, that the Cape – especially Cape Town – will follow on and experience a similar improvement in 2011.

“Gauteng has always been the first province to take off, followed by the Western Cape. We expect this pattern to be repeated.”

The price category most in demand in Gauteng, said Taljaard, is homes in the R800 000 to R2,5 million bracket – and numerous northern suburbs sectional title developments are catering for this demand.

Mirroring the Cape Town recovery, said Taljaard, will be that of Bloemfontein, but at a slower pace and in a slightly lower price range.

Then, he predicts, we will see KZN take off.

“Rawson franchisees in KZN tell me that the recovery has been held up here by the large number of distressed sales. These are often second or third homes bought by upcountry buyers in the balmy days of the property boom. It will take another nine to twelve months to work through this situation.”

The Eastern Cape, said Taljaard, is currently still showing the lowest sales activity. Its sales peaks, he says, have traditionally been 12 to 18 months behind those of the Western Cape and he expects this pattern also to be evident again.

The take-up of new Rawson franchises, added Taljaard, reflects the recovery pattern accurately. A further 22 franchises have been sold this year, including six in KZN, all signed up since March/April. We plan to have 200 new franchises up and running by the end of 2015, including some very active operations in the former “black” areas where owners are gradually sorting out their home ownership documentation.

“In the current market, franchise expansion,” said Taljaard, “is only possible if, firstly, you have a strong widely recognised brand, if your national referral networks can be relied on to generate significant extra sales and if your support systems are comprehensive – and local. It is not wise, generally, to try and provide support from another province on a permanent basis.”

For this reason, he said, Rawson’s will establish a third regional office within the next year, with a support manager, in KZN.

The prospects for the Rawson KZN franchises, he added, look good because they are establishing themselves at a time when the market is weak but as most are highly proactive “young lions”, they will flourish when the “inevitable” improvement makes itself evident in the second half of next year.

Article by: www.rawsonproperties.com