Property will not be hit by World Cup hangover

Wednesday, 07 July 2010
Property will not be hit by World Cup hangover


Property is not likely to suffer from a post-World Cup hangover says Gerhard Kotzé, CEO of the ERA South Africa property group.



He believes the general recovery impetus behind the property market is still very much intact and that realistically this has little to do with the soccer tournament.



“The property market has of course benefitted indirectly from the World Cup-related injection of infrastructure and investment spending over the past six years, but there has not in my view been a major direct boost to the market as was touted by some commentators.



“High net worth individuals attending the soccer showcase may well become buyers of local property after seeing what amazing value we have to offer in Rand terms. But essentially I expect this to be at the upper end of the market spectrum in prime areas such as Cape Town’s Atlantic Seaboard and will have little or no impact down the line.



“Fundamentally, the local market continues to show strength in its own right, reflecting the basically sound SA economy, rather than extraneous influences such as the World Cup.”



Kotzé says this view is supported by the latest median house price of R579 000 furnished by Standard Bank - a figure that continues the rebound from the R500 000 level recorded in May last year – and the First National Bank house price index increase of almost 12% on May last year.



Now, he adds, the “joker in the pack” is interest rates, which, having been cut by 5,5% between 2008 and 2010, could be cut by a further 0,5% cut when the monetary policy committee meets later this month.



“Should this occur it will take home mortgage rates to record low levels, providing strong underpinning for a market that has shown recovery but is still labouring under a degree of over-supply in certain price categories and delicate consumer sentiment.”

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