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Aug 08, 2007:
The national four-week long public sector strike has had a more negative impact on parts of South Africa's property sectors than the new National Credit Act, which was implemented on 1 June, the day the strike began.
That's according to Des Landsberg, sales director of Woodpark Real Estate, which services not only the upmarket suburb of Yellowwood Park near Durban, but also the nearby, entry-level and middle-market areas of Woodlands, Montclair and Woodhaven.
The strike not only slowed Deeds office activity around the country due to a lack of staffing, said Landsberg, but also hit the pockets of prospective buyers whose participation in the work stoppage resulted in a loss of earnings. "This loss has been particularly hard-felt by those in the sub-economic and entry levels of the property market, where many people are government employees such as teachers and nurses," he said.
Landsberg, who is also the local zone manager for the Network Listings (NL) multiple property-listing network, added that it would take another couple of months for them to regain their financial footing, a situation that was ricocheting on many estate agencies in terms of suppressed sales volumes and cash flow.
For Mike Bennett, a director of Network Listings and the managing director of the ProProp real estate group, the rocketing price of petrol has been the latest damper on the lower and middle income markets in his areas.
"On its own, it would probably have had little effect on buying activity. However, on the back of the interest rate increases we've had since June last year, the public sector strike and the implementation of the new credit extension legislation, it's had a very negative impact on market activity," he said.
Both Landsberg and Bennett said, though, that in the last two weeks, there had been definite signs that the market was starting to regain some momentum. Landsberg said the more affordable suburbs such as Lower Woodlands, where entry level homes cost around R600 000, were once again eliciting strong response from advertising.
Surprisingly, activity in Yellowwood Park, despite its upmarket pricing, had shown little sign of flagging in the face of the challenges that had beset the market in recent months. Property price growth here, which Landsberg put at between 10 and 12 percent per annum, was the highest of all the suburbs in his area of operation and exceeded the returns being experienced on most other investment classes.
Anticipating that the interest rate would reverse its current upward trend by next year, Bennett said he expected the market to go from strength to strength provided the focus was on affordability and right pricing.
He added that downward pressure at the top end of the market was persuading sellers to re-examine their asking prices and that this did not mean that prices were coming down but that asking prices were becoming more realistic. At the same time, he noted that prices at the bottom end of the market were being forced upwards, a situation that was causing middle market price growth to stagnate. - Ingrid Smit
