Confidence in Cape property “still high”

News > news - 25 Jan 2007

The past year saw property buyers and investors coming to terms with a two percentage point increase in interest rates and a drop in unit sales, says Bill Rawson, chairman of Cape Town headquartered Rawson Properties.

However, Rawson adds in a company media release, confidence in the Cape residential property market remains high and in fact has led to a further 8% to12% year on year in price rises, which he believes sustainable for the next two or three years.

Rawson’s confidence is based largely on the way the South African economy is being managed: the inflation rate being held within the 3% to 6% target range; a growth of close to 5%, and the government now pumping money into infrastructure and housing – not just into social benefits.

“The action in the property market,” said Rawson, “has clearly swung to the lower and lower middle income categories, where first time buyers are now much in evidence and where upgrades are taking place across the board, resulting in satisfactory year-on-year price increases.

“No-one can predict if and when a bottoming out might take place, but in the current growth scenario it is definitely not imminent. My advice, therefore, is that for the investor seeking maximum returns rather than a long-term investment, now is a good time to sell homes priced in the R2 million-plus category. The proceeds can be re-invested in less expensive residential property: any home below R1 million, remains a very good investment proposition.”

Rawson says the debate about where to invest is currently hotter than ever. Many people, he said, are now in favour of renting and investing their spare capital elsewhere.

“This course now has considerable advantages, if the investor wishes to stick to property, the capital freed up in this way, can be successfully put into lower income property. Homes priced below R700 000 are appreciating at an above average rate with prices being boosted by the ongoing racial integration in the better previously disadvantaged areas.”

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