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New data gives good reasons for optimism
Property trend analysts are impressed that in the first week of April mortgage loans granted in the US were 77% up on the April 2008 figure. A similar, though not quite so spectacular, rise was recorded in the UK for the same period, says Tony Clarke, MD of Rawson Properties.
"Does this indicate that the recovery has begun? If one accepts the old maxim that USA and the UK set the economic patterns for the world, is it possible that in SA the long-awaited revival is not far off?" he says.
"Although historically it has been accepted that there is a lag period of six months before the SA economy is influenced by the US/UK market, the latest Absa figures show that, in real terms, the declines in SA house prices have been nowhere near as drastic as those of the US and UK markets.
"We can, I believe, now be optimistic that in six months SA house prices will stabilise at around current levels.
"I know that almost everyone putting out positive, hopeful messages of this kind these days is immediately shot down by commentators, but I am not saying that the situation has radically altered yet: all I want to stress is that there are now indicators (including these latest US and UK mortgage lending rates) which give hope."
Other positive developments, says Clarke, have been that Trevor Manuel, in his budget speech, drove the message home that the banks now have to extend credit to worthy customers. The current holdbacks, he said, are not acceptable.
"The banks (except Standard Bank) have made peace with bond originators and once again accept that they have an important role to play.
"Also, the banks are now showing an increased inclination for bond lending.
"The elections also went off peacefully and the JSE Securities Exchange and the rand have not been affected by the prospect of a Zuma-led government.
"The rand's performance has surprised most and I predict it will be in the low R7 to the dollar bracket by early 2010. Everything we have said about the soundness of the SA fiscal policies is now better understood - not only here but overseas."
Clarke says the number of cash buyers has increased.
A surprising number are paying 100% of the price in cash (and getting good deals as a result) and there has been a big increase in those able to put down 10 to 30% deposits.
Countrywide the number of visitors to show houses is on the increase at all agencies.
He says there has been an increase in the number of immigrant workers and returning expatriates who now see SA as a better prospect than most of the First World countries, because it is weathering the global economic crisis better than those countries.
Clarke believes the 350 base points drop in the interest rate since December 2008 will stimulate buying and increase the number of people able to afford bonds. It takes time, he says, for these changes to affect the market.
"I think that we should all be taking note of those indicators and I urge the banks, in particular, to study the US and UK figures and ask themselves if the time is not ripe to step up their bond acceptances. Those banks getting in now may well be grateful they did so ahead of stronger demand and greater competition."
Article from: www.sundaytribune.co.za