So says Berry Everitt, CEO of the Chas Everitt International property group, who notes that with interest rates now at a 30-year low, it can be expected that home price growth, which has slowed somewhat in recent months, will pick up again towards the middle of 2011.
“However, I do think that this will be constrained below 10% unless the banks become quite a lot more lenient – which is going to take time because household debt levels are still high and they are still dealing with quite a large number of distressed sales and properties in possession.”
For the current situation to change radically, he says, what is really needed is a significant improvement in economic growth to boost employment security and new job creation. “This would be the best way to increase affordability and bring new buyers to the market; help existing homeowners to pay off their debts and upgrade to better properties and above all, give the banks confidence to lend more easily.
“And there has been some good news on this front lately. Although GDP growth only reached 2,6% in the third quarter of 2010, we need to remember that this is three times higher than it was a year ago – and way, way off the -7% low experienced in the second quarter of 2009. We’ve come a very long way in a relatively short time and are poised to do even better.
“Manufacturing production was up 2,5% yoy in November and more positive news was that the FNB / BER building confidence index had increased to 38 - the highest level in two years.
“This was mostly due to increased confidence among service providers at the front end of the building pipeline, such as architects and quantity surveyors, but it suggests a broader recovery in the actual construction industry from the second half of next year. And since this industry is one of the biggest employers in SA, that will translate into a real benefit for real estate.”
Meanwhile, says Everitt, excellent opportunities currently abound for investors who can afford to purchase additional properties, with the best “buys” in this respect being properties in popular coastal locations.
“Many good quality second or holiday homes in these locations are now for sale at really competitive prices, and the prospects for value growth in the medium to long term are sound as coastal land becomes an increasingly scarce commodity. And this festive season, our coastal offices are all ready to embrace the savvy purchaser wanting a second home in the sun.”
ISSUED BY CHAS EVERITT INTERNATIONAL