Johannesburg - The outlook for property for 2010, while still mild, was far
better than 2009, auctioneers Alliance Group said on Tuesday.
"In 2010 people will start spending more as the stock market
continues to rally and the economic outlook improves," said CEO Rael Levitt.
Keeping the show on the road over the last 18 months of turmoil
had been a true test for many developers, brokers and banks, he
said.
"In 2010 the challenge will be to refocus on the long term and
what the post-World Cup period will bring.
"We must not forget that 2010 may well be a tale of two halves,"
Levitt said, adding that the impact of the Fifa 2010 World Cup in the first
half of the year could not be underestimated.
"The World Cup will be a chance to showcase South Africa, and,
despite high levels of crime and a still shaky economy, South
Africa will prove the sceptics wrong," he said.
"For the first time the world will see that South Africa is in
many ways closer to Argentina and Malaysia than it is to most
African states."
However, South Africans should remember that the economic headwinds were still strong and unemployment, above 20%, was
still alarmingly high.
"The property market, still burdened by debt, faces a long, hard
slog; in fact, our view is that the property market is indeed in a
period of a slow, weak and dull recovery."
Levitt said that while the World Cup would boost sentiment, and
likely cause a bounce in high value residential properties, it
unfortunately would not be a magic pill to quickly relieve the
downturn.
"In the first half of the year, the property market will
experience larger property liquidations and insolvencies than ever
experienced in the country."
Opportunity for auctioneers
He said a "sweet spot" might emerge for estate agents and
auctioneers if buyers were buoyed by positive World Cup sentiment,
but sellers who were mildly distressed would accept realistic
prices.
"I truly hope that certain agents don't create hyperbolic
euphoria around the World Cup and create a situation where sellers
start asking unrealistic prices, thinking that soccer fans are
heading to South Africa on property shopping trips ... this will
kill sales".
He said house price growth threatened to be limited for the next
year because of the damaging legacy of the last two years.
"The last decade led to large house price inflation and as banks
have become relatively sober in mortgage lending, the complications
left by the last decade's property boom will be with us for a
while."
Levitt believed auctions would grow as new entrants joined
an increasingly competitive space.
Distressed property sales would still be coming to the auction
floor for most of the year.
"We will see private investor appetite growth in commercial
property, and when our banks further loosen credit lines we will see
even more growth in auctions as a means of buying."
Levitt said 2010 would also see record numbers of the larger
listed property funds selling their smaller properties, as smaller
investors got back on the acquisition trail.
"The smaller investors who were battered by the tight credit
market were some of the biggest sellers in the market only six
months ago - but are now also looking to buy again."
- Sapa