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Property market still over-supplied, rate drop might have improved prospects
Commenting on the Reserve Bank's decision not to lower interest rates, Dr Andrew Golding, CE of the Pam Golding Property (PGP) group says a reduction in the interest rate would have been welcome, not only from a general perspective, but to have provided a further confidence boost in South Africa's residential property market, given the continued lethargic economic growth prospects.
"The housing market continues to experience an over-supply of stock and, while bank lending approvals have improved, access to credit remains a key factor which is impacting on concluded transactions. However, from the outset of 2012 there is a sense of increased positive sentiment evident in the marketplace and the group reports that group sales in December, traditionally a quieter month than most, saw an upturn in sales turnover of 19% over December 2010," says Dr Golding.
"Sales activity has increased from a national perspective, particularly in the metropolitan areas where there is good infrastructure and access to quality educational facilities and which is within easy reach of the workplace. There is also a sense that those buyers who have been waiting on the sidelines for conditions to improve are becoming active, particularly in the middle to lower house price ranges. However, some sellers who remain resistant to realistic, market-related pricing hamper the uptake of the over-supply of stock. There remain, however, good buying opportunities, which present sound investment potential, for those with finance and sufficient funds for a sizeable deposit, or a high cash component.
"With the global economic outlook still uncertain, it remains to be seen to what extent such macro-economic factors will impact on South Africa during the course of the year, and ultimately on our housing market. However, the group remains optimistic about the long-term benefits of investment in residential property in the country, which continues to compare favourably in regard to other forms of investment," he concludes.
