The outlook for property for 2010, while still mild, was far better than 2009, Alliance Group auctioneers said on Tuesday.
“In 2010 people will start spending more as the stock market continues to rally and the economic outlook improves,” said chief executive Rael Levitt.
Keeping the show on the road over the last 18 months of turmoil had been a true test for many developers, brokers and banks, he said.
“In 2010 the challenge will be to refocus on the long term and what the post-World Cup period will bring.
“We must not forget that 2010 may well be a tale of two halves,” Levitt said, adding that the impact of the World Cup in the first half of the year could not be underestimated.
“The World Cup will be a chance to showcase South Africa, and, despite high levels of crime and a still shaky economy, South Africa will prove the sceptics wrong,” he said.
“For the first time the world will see that South Africa is in many ways closer to Argentina and Malaysia than it is to most African states.”
However, South Africans should remember that the economic headwinds were still strong and unemployment, above 20%, was still alarmingly high.
Long, hard slog
“The property market, still burdened by debt, faces a long, hard slog, in fact our view is that the property market is indeed in a period of a slow, weak and dull recovery.”
Levitt said that while the World Cup would boost sentiment, and likely cause a bounce in high value residential properties, it would not be a magic pill to relieve the downturn.
“In the first half of the year the property market will experience larger property liquidations and insolvencies than ever experienced in the country.”
He said a “sweet spot” might emerge for estate agents and auctioneers if buyers were buoyed by positive World Cup sentiment, but sellers who were mildly distressed would accept realistic prices.
“I truly hope that certain agents don’t create hyperbolic euphoria around the World Cup and create a situation where sellers start asking unrealistic prices, thinking that soccer fans are heading to South Africa on property shopping trips … this will kill sales”.
He said house price growth threatened to be limited for the next year because of the damaging legacy of the last two years.
“The last decade led to large house-price inflation and as banks have become relatively sober in mortgage lending, the complications left by the last decade’s property boom will be with us for a while.”
Levitt believed that auctions would grow as new entrants joined an increasingly competitive space.
Distressed property sales would still be coming to the auction floor for most of the year.
“We will see private investor appetite growth in commercial property and when our banks further loosen credit lines we will see even more growth in auctions as a means of buying.”
Levitt said 2010 would also see record numbers of the larger listed property funds selling their smaller properties as smaller investors got back on the acquisition trail.
“The smaller investors who were battered by the tight credit market were some of the biggest sellers in the market only six months ago — but are now also looking to buy again.” – Sapa