Good opportunities but slow growth in 2012

“And generally speaking this will mean that ever-increasing levels of professionalism are required of estate agents, who will lose out if they don’t pay attention to training and skills development on a continuous basis, or if they don’t become more efficient by embracing new business practices and technologies,” says Jan Davel, MD of the RealNet estate agency group.

The other side of the coin in 2012, he says, will be the tendency of most households to keep a very tight rein on expenditure and new borrowing as they continue to rebuild their credit records and more importantly, lower their debt exposure.

“And we believe that there will be continued resistance to taking on new credit such as a home loan for quite some time to come - although it is important to note that real estate is always an underlying asset, unlike most of the other commodities people buy on credit.”

This resistance, says Davel, does not bode well for expansion of the real estate market in the shorter term, despite a huge increase in the affordability of property over the past three years. “Rather it suggests that both demand and home price growth will remain constrained, especially as there also does not appear to be any significant relaxation of bank lending criteria on the cards.”

Indeed, he says, RealNet concurs with Absa, FNB and other industry commentators in expecting the rate of home price growth to remain in single digits below the rate of inflation (around 6%) for most of 2012 – except perhaps in isolated pockets of the market where specific circumstances cause demand to suddenly exceed supply.

“Nevertheless, we are positive that the market in 2012 will hold excellent opportunities for both long-term investors, in the form of very competitive pricing, and for those real estate professionals who are prepared to go the extra mile, because they will have a rare opportunity to significantly grow market share.

“We also believe that the current rebuilding of household balance sheets will be extremely positive for the market in the longer term, as it will enable consumers to better withstand future economic ‘shocks’ such as interest rate increases.”

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