Snappy sales signal good price growth in 2010

With sales volumes dramatically up over the past three months, the residential property market is set for a sure and steady recovery in 2010.
That’s the word from Lew Geffen, chairman of Sotheby’s International Realty in SA, who says: “The whole market has really come alive again since October, and nationally, the number of sales made in the last quarter was more than 45 percent up year-on-year, with some areas showing even bigger increases, and our turnover was up 60 percent.     
“Big ticket sales, especially, are back with a bang, and stock is being taken up fast, even in the most expensive suburbs of Johannesburg and along Cape Town’s Atlantic Seaboard. Several really upmarket homes that had been on the market for around 18 months have recently been sold.”
In short, he says, the market is rapidly normalising towards a supply and demand balance, and house prices can be expected to return to the traditional average growth rate of around 9% this year.
“It’s as though the market is trying to make up for lost time now, and lower interest rates and greater affordability are definitely playing a strong role in this. But there are also other influences in play – not least the fact that the banks are definitely committed again to the home loans market, and competing strongly for market share even as they maintain caution in determining who they should lend to. This means that those borrowers who do have good credit records and sufficient disposable income can once again shop around for the best mortgage options.
“In addition, there are many investors out there who are determined not to be left out of the next property upswing and have an appetite to buy quickly at current prices because they realize the market has already turned.”
However, says Geffen, in this scenario one can also expect new development to start again, and bring new stock on to the market that will keep prices very competitive. “Certainly, home sellers and investors should not be expecting the 20 and 30 percent annual price growth that we saw during the most recent property boom, which is actually unhealthy for the market.
“What they should be able to expect, however, is steady growth that beats inflation, and we believe 2010 will put the market firmly back on its feet ahead of a long period of such growth.”

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