Residential property outlook for 2005

Yet more property price increases are on the cards for 2005, albeit at a slower rate than last year, according to Len Pears, founder and director of Pears Properties. “Residential properties in the Western Cape showed increases of over 30% last year. Sales in the greater Southern Suburbs over the past two months have increased at a slower rate of roughly 15% annualized, due to buyer resistance. Buyers have definitely put their foot down and are not prepared to pay unrealistic prices for houses anymore,” says Pears.

Rental returns on residential properties have softened over the past two years and are currently yielding between 6% and 7% on the value of the properties. Comments Pears, “This is not too shabby when you take in to account the 15% capital gain expected for 2005. Property is the only absolute secure investment that offers you this excellent return.”

“Trends over the last few months indicate a more balanced market for 2005. Although there are currently more buyers than realistically priced properties for sale, this is definitely changing as more and more sellers are coming into the market,” says Pears, “giving buyers a slightly better chance”.

“The much talked about “Property Bubble” is a fallacy,” remarks Pears, “Now that South Africa has become part of the world market, and Cape Town an international and national favorite, we are confident that property will continue to grow. As a company, we are confident of the growth in the property industry for the coming year and beyond.”