Crystal-balling property’s performance
Rode - South Africa
Notwithstanding passable growth in house prices during 2014, the likely direction of real prices in the medium term is still south. This is the opinion of Erwin Rode, property economist and professional valuer at Rode & Associates.
On the back of a moderate relaxation in credit standards of banks, house prices were able to show growth slightly in excess of consumer price inflation last year. “However”, warns Rode, “there remain factors that are likely to dampen the growth in house prices this year.” Here he mentions as examples the still-high household debt levels, upward pressure on the cost of operating properties, declining commodity prices, a Treasury that is under severe pressure, power outages and a lack of formal job creation.
On the office-property front, Rode foresees that jaded economic activity and its adverse effects on employment and business sentiment will continue to dampen demand for office space. “In fact, because of the shrinking demand for office space and overzealous office developments, office-vacancy rates have, since the beginning of 2013, been rising. This explains why market rentals for prime offices have over the past two years showed sub-inflation growth,” notes Rode.
Residential Property Indices
Lightstone - South Africa
2014 ended on a stable note with national residential inflation at 6.72% (0.02 percentage points of the 6.7% that Lightstone forecasted in January 2014). The winning market is still the low end affordable sector and we expect this to continue as most mortgage lenders and estate agents aim to further penetrate this market. We've seen a sharp turn in inflation of the highest value markets, but due to low transaction volumes in this market, we remain cautiously optimistic that it will not have a major capital deteriorating effect before picking up again.
Quantitative easing in the euro zone looks like good news for the rand although it holds a risk for the South African property market. The current political narrative on foreign land ownership might result in amplified nervousness of foreign property owners who will be looking to use the favourable rates to get out of the riskier market. Lightstone estimates a relatively small proportion of the residential market in foreign hands, but the potential ripple effect of negative sentiment can be disruptive.
Achieving an accurate valuation on residential property is an indication of an estate agent's skill
Rawson - South Africa
“There is,” says Tony Clarke, Managing Director of the Rawson Property Group, “no aspect of an estate agent’s work which so clearly reveals the difference between the amateur and the truly competent, professional estate agent so clearly as the market pricing evaluation process.”
“In the 25 years that I have been associated with property,” said Clarke, “I have seen properties on which the market evaluations by different estate agents have varied as much as 20% — with both agents claiming that theirs is an accurate assessment.”
“The simple truth,” said Clarke, “is that to value a property accurately requires training by an expert. Those who work on formulae or mathematical tables will in most cases be out of date, because inflation and interest in growth rates, change not only year-by-year, but sometimes also month-by-month.”
“Similarly,” said Clarke, “those who rely on maths or statistics to arrive at their figures, will also usually be far off the mark.”
Myths about foreign property buyers 'must be dispelled'
IolProperty - South Africa
According to Lightstone data, only about 3 percent of property in South Africa is owned by foreigners and, at best, 2 percent of all annual purchases are by foreigners, so the reason for wanting to restrict ownership and who this is meant to benefit is difficult to gauge, says Seeff chairman, Samuel Seeff.
"It seems to just be that time of year again when the land debate regrettably turns to foreign property ownership and, rather than advance a solution to the land issue, it sends the wrong message to investors and puts undue pressure on the property market.
"It is also not foreign visitors, but mostly those who live here permanently that constitute the bulk of property buying. Consider also that as many foreigners sell their property each year, which possibly even takes foreign buying into negative territory in real terms."
According to Propstats, foreigners bought about 456 out of a total of 10 321 properties that were sold across the entire Cape metro last year. This is where the bulk of the actual non- resident buying takes place. Even across the richest and most expensive residential property strip favoured by foreigners, the Atlantic seaboard and City Bowl, only just over 10 percent of all sales last year were to foreigners, says Seeff.