Adaptability is vital for property industry

Jan Davel, MD of the RealNet estate agency group said that 2012 could be expected to bring a continuing escalation in consumer demand for better service, better information and better value for money, in real estate as well as other economic sectors.

This would occur as the general consumer became more accustomed to legal frameworks such as the Consumer Protection Act and adapted to new ways of engaging in the property market.

"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," Davel said.

Berry Everitt, MD of the Chas Everitt International property group, added that 2012 would also be the "tipping point" in the real estate industry when online marketing gained more traction than traditional print and other forms of advertising.

The change would be driven largely by consumers, "with home sellers becoming increasingly focused on greater exposure of their properties and the potential for faster sales, and homebuyers looking to do most of their comparative 'shopping' for the best value before they venture out to actually view any properties".

"Having said that, though, it is really not our belief that print advertising will disappear.

"Rather, we believe that 2012 will also see the property publications starting to reshape themselves to make their offerings more cost effective," said Everitt.

Another prediction by Everitt for 2012 was that estate agents would play an increasing role in co-ordinating and facilitating the essential services around real estate sales, such as compliance certificates and bridging finance.

"And once again, this will be driven by consumers, who will favour those agents and agencies able to deliver the most comprehensive and efficient service".

At the same time, he said, the increasing pressure on agents to increase both their professional qualifications and their use of technology was bound to fuel further consolidation in the industry.

"Smaller operations will find it difficult to keep up with the expenditure required to field top performing agents, and will also find it advantageous to be part of a bigger group with a wider marketing network.

Looking to the real estate market's performance, Young Carr, CEO of Aida National Franchises was "fairly positive" although he did not foresee that there would be any significant change in bank lending policies or increase in sales volumes.

Carr said: "Affordability will no doubt increase, but we do not expect this to translate into a surge in demand or home prices, as many households will still be determined to avoid any new borrowing until they have paid off much more of their existing debt."

Davel said that it would be the tendency for 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," added Davel.

This resistance, Davel continued, did 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 would remain constrained, especially as there also did not appear to be any significant relaxation of bank lending criteria on the cards."

RealNet concurred 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 might cause demand to suddenly exceed supply.

Davel said: "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," concluded Davel.

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