My friend Kura Chihota (you may know him from "Ask the Property Experts?" on Business Day TV) posted an excellent look at where we currently stand in grander scheme of things. I hope that he will not mind but here is what he said:
From my buds over at Lightstone "Total year-on-year national house price growth was recorded at 7.4% at the end of December 2013 which was 0.15% above Lightstone’s optimistic forecast for last year. This was on the back of expected sluggish economic growth of 2%, a CPI rate nearing the 5.8% mark and prime interest rates at 8.5%. Despite the recent surprise interest rate hike of 50 basis points, most economists don’t expect significant changes to the other key drivers and continue to predict CPI to edge closer to the 6% mark and the economy to grow by between 2.5% and 3%."
Commercial and Property Attorney
SA property market in 'new normal' mode
While the latest interest rate increase may well take some gloss off the process, the South African residential property market will nevertheless continue to settle into a 'new normal' mode that is more realistic and more sustainable,' says estate agent Ronald Ennik.
'Lets face it, the halcyon days of 2005/6 (before the mortgage origination business collapsed) were never normal, and are unlikely to be repeated,' he adds.
'Also unlikely to be seen again is the prolonged laager mentality that kept the bulk of buyers and sellers out of the market since 2008,' he adds.
'Prior to the rate increase, we were seeing a steady trickle back into the market of the dammed-up demand of past years. Show house attendances have been better than they were six years ago, and more and more noteworthy sales have been coming through - at prices not seen for a long time.
'I believe that this process will largely discount the interest rate increase and continue on its path,' says Ennik.
'Also increasingly evident now - certainly at Ennik Estates - is the welcome return of the classic sole mandate, which ensures thatit is buyers, and not estate agents, who compete on a property.
'Furthermore, after being in virtual mortgage-granting shutdown since 2008, banks have their heads back above the parapet and are now far more consistent and predictable in their home finance decision making - which is a stabilising influence,' says Ennik.
'All indications are that this gentle improvement in market conditions will continue - albeit at a slightly slower pace - particularly if the 2014 general election comes and goes smoothly and there are no unpleasant surprises on the socio-economic and political front,' he concludes.
Ennik Estates Press Release