Property has taken a knock these past few years and investing in fixed property has not been on the priority list for developer’s and private homeowners after the twin evils of the so-called global meltdown and the introduction of the Financial Intelligence Centre Act (FICA).
The days when sellers chose between buyers who offered more than the asking price are gone and homes have to be ‘correctly priced’ to sell, with 93% of sellers having to take less than their asking price.
But all is not gloom and doom as the banks are now prepared to look at 90% bonds from their clients and bond originator clients whilst the average time to sell a medium priced house is now down to 15 weeks and one day. Houses above the R1.5 million price bracket in Port Elizabeth are taking a little longer to move and are touching the 260 day mark to be sold.
Many developers are showing signs of re-entering the market but an oversupply of space still exists. The better and more recognised areas like the golden strip along Cape Road are showing high demand and decent returns.
The buy to rent market is still dependent upon the purchase of bargain properties. The price range for private homes to rent is still in the favoured R3 500 to R5 500.00 per month range with resistance above those figures.
Entry into the market for most couples is still via the outlying areas such as Broadwood and surrounds which offer smaller homes on larger plots.
All these opinions were revealed during an intimate breakfast with Clarry Lesch and Thomas Lawrence from Lew Geffen Sothebys recently.
Despite the historical areas of Richmond Hill and Central being much in the news I get the impression from Sothebys that there is not much movement in the area with Thomas opining that any property above the magical R1 Million would have to be exceptional.
The amount of empty office space in the Newton Park area and old CBD area of Govan Mbeki remains a cause for concern, though. Thomas agrees that there is some exceptional space available in areas near to the NMB Stadium for example but the development around that area needs another big injection of focus similar to the World Cup to once again stimulate growth.
If you are looking to enter the property market the old rules still apply though; make sure you can afford the repayments comfortably, take a 10 year view (as one who bought 12 years ago I can only marvel at what my property is now worth), don’t panic and never overextend yourself.
Economists say that the property market lags an upturn by around 2 years and, by my reckoning, those two years are up towards the end of 2012 which means you should be looking now.
One other indicator is when the number of holiday homes for sale slows down – take a drive through somewhere like Plettenberg Bay today and it seems as though every second house is for sale.
Sotheby’s Principal, Clarry Lesch and CEO, Thomas Lawrence on the balcony of the Town Lodge overlooking Humewood Beach.
