"Rampant' property buyers' market predicted
Property sellers will be obliged to be realistic about their asking prices in 2008 as a "rampant" buyers' market will hold sway for much of the year, with at least one and possibly two more interest rate increases in the pipeline.
However towards the end of the year, the Reserve Bank should start easing interest rates once more, giving the market a moderate kick start again but without the runaway price inflation witnessed at the market's peak three years ago, says Martin Schultheiss, CEO of the Homenet property group.
Meanwhile the real estate industry can be expected to experience consolidation as especially independent agencies struggle to adjust to the new market conditions and choose to earn an income in other ways.
"Bigger, more established brands like Homenet have been in the market at times when interest rates rose over 20% and will rely on their strong brand and people to maintain market share."
Schultheiss says the 2008 real estate market will be characterised by slower growth in values at the top end. "The middle to lower end of the market is still experiencing a high level of demand as the migration of the mass market continues and therefore you can expect above average growth in these sectors.of property.
"I think we will also see the emergence of property investors at the lower end of the market with strong rental yields making this an attractive place to invest."
He says there is understandably consumer wariness right now as debt-serving levels have reached record highs of around 76% of disposable income and homeowners' ability to meet their bond commitments has become strained.
"We have seen an increase in the defaults that banks are experiencing, and it has also become a lot more difficult to qualify for a loan due to stringent affordability checks by the banks. But new products like the 30-year bond, interest-only repayments and payment holidays are available to consumers to allow them to manage their debt during these tough times.
"The key is to try and hang on to your property. Real estate is a long term investment and while it is attractive to cut and run now, long-term growth has always prevailed and property is an excellent retirement vehicle.
"So in short I foresee that homebuying and selling in SA will continue to take place in 2008 in more 'normalised' conditions, driven by conventional buyers' property needs and circumstances but with sales volumes at a lower ebb, until a strongish recovery in the early part of 2009 aided by the final build up to the Soccer World Cup."
In this climate, he says, the Homenet group will continue to market aggressively, focusing on the fundamentals such as professionalism, service, accurate valuations and sound advice that have seen it meeting consumers' needs for the past two decades.
Article from: www.homenet.co.za