Banks reluctance and government inefficiencies retarding economic growth
Spokespeople for the real estate sector are often accused of talking the market up but Bill Rawson, chairman of Rawson Properties, this week took a very different tack.
It worries me, he said, that many economists are almost too optimistic about our ability to shake off the recession. While it is true that South Africas fiscal policy has been wisely and conservatively managed with the result that we have not felt the worst effects of the crash, most commentators are still, I believe, underestimating the effect of the banks reluctance to lend.
Anyone planning for the future particularly anyone planning property developments - has now to take this into account: in the housing sector we are still seeing almost half the bond applications turned down and other sectors are facing similar difficulties in raising finance without which growth can only be slow.
In the last year, said Rawson, consumers have, understandably, become wary of approaching banks. These, he said, are often now seen as tight-fisted and unlikely to judge applications on their merits. Many would-be homeowners have now given up all thought of owning a home in the near future, he said.
Getting a bond today is a challenge the only way in which most people can hope to succeed is to work through an experienced bond originator who knows exactly what criteria each bank operates on and how to prepare applications in the most favourable way.
Also of concern and likely to retard growth, said Rawson, is the effect of the countrywide strikes, the states inefficiencies, reckless spending and corruption.
It is alarming to calculate just how much money appears to have been wasted over the last few years, said Rawson, and those who believe that does not have an affect on peoples confidence are entirely wrong.
We find among our business colleagues that there is now a real fear in many quarters that South Africa could be losing the battle against corruption and inefficiency and could end up in the same hot water in which many of our neighbouring states have found themselves.
On a more positive side, there are clear signs, said Rawson, that the economy is recovering insolvencies have dropped markedly, car sales are up and house prices are rising slowly but it will, he believes, be at least another year before we see anything like good trading conditions.
Does this mean that property buyers should hold back?
Not at all, says Rawson. If you can find the cash, now is a good time to buy provided you drill down and really investigate and check out the position and potential of your possible purchase.
The FNB Cape Metro Property Barometer indicates that buy-to-rent investment is declining, but this, he said, is, again, purely as a result of a lack of bond finance. With rents rising due to severe stock shortages, now is actually an extremely good time to buy into the property market and, I am glad to say, those with resources are doing so.
Article from: www.rawsonproperties.com