Emerging trends in Real Estate

The Urban Land Institute and PriceWaterhouseCoopers have just published the latest "Emerging trends in Real Estate", although it focuses on the international market and America and Canada in particular, it makes for very interesting reading. Two quotes I think are appropriate for our property market “Investments made in 2009 could result in substantial future returns.” and “It’s time to work your asset base the best you can and realize you can’t stop losing some value. Do the best you can to lose less.” You can download this report at The Urban Land Institute.

Some trends for the South African property market:

The most prominent and frustrating trend in our market currently is that there are many thousands of prospective buyers out there who can comfortably afford their monthly home loan installments but are being refused bonds because they don’t have significant deposits.

Among the other trends expected to dominate the South African property scene during 2009 and into 2010 is the time it would take home buyers to realise meaningful capital gains on their properties. We’re going back to a more normal market trend of up to five years to build equity. Though the days of over-night profits are past, however, property will retain its status as one of the best performing asset vehicles available anywhere. The general feeling is that property throughout the world would remain a solid long-term investment asset.

A renewal of interest in metropolitan centres, this would be driven by investors and end-user buyers looking for best value for money with regard to bricks and mortar, as well as a means of alleviating transport costs. Another trend likely to gather momentum was the off-loading of holiday homes and second properties, and at extremely competitive prices. The interest in fixer-upper properties is waning, people no longer want to spend money on renovations on top of the costs of buying.

Depending on what stimuli were added to the market melting pot going forward, the average selling time for a property could go either way. (During the last quarter of 2008, FNB put the average time a property spent on the market before selling at 15 weeks and 3 days.) Inevitably there would be an increase in repossessions but hopefully these would be kept to a minimum as a result of a degree of leniency and good advice from the banks.

Estate agents’ negotiating skills would be called into play more and more often, to bridge what sometimes appeared to be chasms between sellers and buyers. Agents could also expect to have to arrange repeat viewings of a property for the prospective buyer before he would finally commit pen to paper.

Better-than-average value growth was likely to be found on properties in coastal areas or near to strong economies, while the slowdown in new developments would probably continue into 2010 in most areas. Finally the next few months should see many serious buyers step out of the wings, driven to decision-making by personal circumstances or the threat that by waiting too long for prices to hit bottom, the market will turn and they will end up losing the advantage of being able to buy at greatly discounted prices.

Article by: RE/MAX 2000