2010 property outlook
Commenting on the 26 January 2010 decision by the Monetary Policy Committee meeting to leave the repo rate unchanged, Dr Andrew Golding, stated that although the industry is seeing some positive indicators, it is evident that South Africa's economy is by no means out of the doldrums and a further boost for the economy would have been most welcome.
“We are still hopeful that the interest rate may decrease further during the course of this year. However, what the market also needs is for the mortgage lending confidence of the banks to increase. We did see a small improvement in mortgage lending during the last six months of last year but overall mortgage lending criteria are still strict and banks are lending selectively,” he continues.
“The common view on the current residential market is that the negative trend in house price growth has halted and we are seeing consistent positive growth in house prices, albeit very moderate. We anticipate that nominal house price increases, i.e. considering inflation, will be at levels of around 6-7% per annum.”
World Cup buying?
“Importantly, sentiment around the Soccer World Cup is increasingly upbeat and is having a positive impact on foreign direct investment. We have seen increased interest from overseas homebuyers with sales concluded over the festive season and we expect the uptake from foreign purchasers to increase leading up to the World Cup but particularly thereafter. The single biggest factor about this anticipated increased demand is the huge exposure South Africa will receive globally.
“It is a strong trend among holiday and business visitors to return and consider purchasing property here. This is a process which can take several years, and now that we are being elevated onto the world stage during an event which will draw enormous and unprecedented attention to South Africa, we expect that in ensuing years we will see an upturn in investment in property among overseas buyers,” he concludes.
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