Worldwide, there is currently much debate regarding the potential inflationary impact as a result of the post-recession process, and from a South African perspective the weight of consensus is that we are more likely to enter an inflationary era than experience what some commentators would describe as stagflation. Unfortunately we cannot avoid the fact that factors such as the proposed Eskom tariff hike will have an inflationary effect on our economy.
While there are some concerns at present regarding business confidence, these are overridden by a more positive market sentiment in general. This is boosted by the increasingly positive effect of the forthcoming 2010 Soccer World Cup, particularly as visualisation takes place. The stadiums are looking good, road infrastructure and airports are making progress – in fact a great deal of work is taking place.
From a residential property perspective we have begun to see the effects of the interest rate reductions become evident. Traditionally there has been a three to six month lag from when interest rates either increase or decrease, till they take effect in the marketplace. And sales have definitely started to increase, despite the fact that the banks have not in any meaningful way relaxed their stringent lending criteria. This remains the most significant factor still impacting negatively on the residential property market.
Having said that, the processing and flow of mortgage applications is proving somewhat easier and as a result these are converting to actual sales quicker than previously. PGP residential sales are reflecting an increase, with an overall improvement in sales of 25 percent year on year. All our regions are reporting increased activity which is translating into increasing sales.
From a house price perspective, we have not yet seen an upturn in property values, which have largely remained fairly flat except for some areas which have shown a marginal increase.
While all sectors of the housing market are experiencing increased movement, the very top end of the market remains active with serious buyers clearly evident. Of interest is an ultra-luxurious, prime-located Bantry Bay home which PGP is marketing at R100 million.
For the rest of the year (2009) we anticipate that activity in the marketplace will increase steadily to the end of the second quarter next year (2010). And while December traditionally tends to be a relatively quiet trading period, we expect to still conduct consistent sales during this period this year.
Given the government's desire to boost economic growth it is hoped that the interest rate will continue to reduce towards the low single digit figures to which we aspire. On a further note of confidence we see that South Africa remains attractive to returning expats – many of whom have taken a pragmatic approach in acknowledging that the rest of the globe is still experiencing very difficult times.
Issued by Gaye de Villiers

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