Johannesburg - South Africans are finding it harder to sell property because of the difficult economic climate, but there are areas which could spurn the overall negative trend forecast by analysts.
"If the rand slides any further, the luxury residential property market in prime areas near new stadiums built for the 2010 Fifa World Cup will buck the downward trend, making the local market look cheap by international standards," says Alliance Group CEO Rael Levitt.
Overall, however, the property market is expected to remain under pressure throughout 2009, according to Absa property economist Jacques du Toit. "Price growth will be negative for the first half of the year, even though interest rates are coming down. The recovery of the market will be gradual."
It's not only pockets of the high-end market that look set to see an improvement. Pam Golding Properties' office manager in the Johannesburg east area, Mahadi Buthelezi, says properties below R800 000 in Johannesburg east, Soweto, Pretoria and Midrand are expected to perform well.
She says this is due to affordable prices and 2010 activities within and around Johannesburg east, government employees situated in the Pretoria area, affordability and major shopping malls opening in Soweto and Midrand's great position in an economic hub.
Despite the optimism, Du Toit says "the positive developments in the economy, such as the decrease in food prices and decrease in inflation, will gradually affect property markets but it will be a slow process."
Reasons for this declining price growth result from factors such as unemployment. "Employment will come under pressure because of bad economic conditions and that will affect household income and filter through to the property market; all segments of the property market are expected to experience difficult times," says Du Toit.
Buyers and sellers need time and patience
He says property owners should not sell just yet because "price growth and demand for property is low. Rather hang on to your property until economic conditions improve".
Buyers, on the other hand, should "take their time and select very carefully for the property that most suits them".
He says this has been the trend for the past two years, but Absa expects inflation and interest rates to fall further in 2009, which should benefit the property segment by 2010.
The Absa housing review showed prices for properties between 80m² and 400m² dropped by 6.3% in real (that is, after-inflation) terms in the second quarter of 2008 and 10% in the third quarter, when compared to the second and third quarters of 2007.
Prices in the so-called affordable category (homes up to 79m² and under R400 000) rose by 0.1% in the second quarter of 2008 and dropped by 5.4% in the third quarter when compared to the respective quarters in 2007.
Luxury housing prices dropped by 1.6% in the second quarter of 2008 and 2.7% in the third quarter, compared to the respective quarters in 2007.
According to First National Bank, the average period homes are sitting on the market expanded from three-and-a-half to five months in November 2008.
Cape Town resident Steve Bunker, who is emigrating to Europe, has been trying to sell his house in Zeekoevlei for five months. Bunker says he has been experiencing problems because "there are a lot more people looking to sell due to high interest rates".
He says he had buyers lined up, but they backed out because they wanted to wait for six more months in the hope that the home's price would be further reduced.
- Fin24.com