Economic growth ‘will keep property stable’

A solid economy will keep the property market on an even keel in 2008, despite higher interest rates, fuel and food prices, says Berry Everitt, MD of the Chas Everitt International property group.

“I think property price growth will drop to between five and 10 percent during the first half of the year, but start to rise more strongly from the third quarter.

“The Reserve Bank will clearly be in no hurry to lower rates even if oil prices and inflation do moderate. It will no doubt try to keep a lid on economic growth and especially on spending, but is still unlikely to raise rates much further.

“On the other hand, fixed investment will continue to rise as we go towards 2010 and this will keep the economy on a sound footing – while also maintaining the confidence that is such an important element of a healthy property market.”

At the moment, he says, that confidence is being undermined by the ongoing uncertainties surrounding the ANC leadership struggle and the possible effects of the outcome on the tripartite alliance and ultimately, on labour relations.

“But this will hopefully also be resolved by the middle of 2008 and then, with the number of potential buyers continuing to increase as a result of BEE, the property market should pick up – especially if developers start coming to the party and delivering new stock at the right price.”

It has been pointed out, says Everitt, that the market did not actually do that badly in 2007, “considering the fact that it had several interest rate increases and the National Credit Act thrown at it.

“Prices have continued to rise steadily, illustrating that our market is a lot more robust than many others around the world, which are not performing well despite interest rate reductions. And we believe it will continue to demonstrate this characteristic to the benefit of those who invest judiciously and for the medium to longer-term.
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