2009/02/04

Although a full-scale recovery is not on the cards yet, price falls are set to end and property values will begin to appreciate from April onwards.

This is predicted by Johannes Barnard, executive sales manager for ASLO Holdings, who adds that as sellers see prices improving they will be tempted to hold back their properties until the market reaches a new peak

Barnard has on several occasions said that the current very negative perception of residential property's prospects is without any logical foundation. Property, he believes, should be an integral part of any balanced portfolio because it has a proven ability to withstand fluctuations better than other asset classes and to give satisfactory returns in the medium to long-term.

"SA's situation differs from that of the USA and Europe in that, although we are affected by their economic woes, we did not get ourselves mired in debt, as they did.

"The sound economic policies and the continuous commitment by government to improve infrastructure and living standards put us in a better position than other countries," he said.

"This means that the SA housing market must remain a good asset class for the future."

Barnard added that those who already own property are in a strong position because the prices of new developments or, indeed, of any sort of new building, have been pushed up by sharply increased construction costs.

This, he said, that for the first time in a long while, existing housing is inexpensive in comparison to new buildings. Many developers, he added, have been forced to curtail their activities and this will soon result in a shortage of new homes to buy or to rent – which, again, will push up prices.

Barnard pointed out that the recent high interest costs are nowhere near as high as the peaks reached in 2000/2001 from which the market swung back with renewed optimism and life.

"It has to be accepted that these rises and falls are cyclical and necessary, and a correction is overdue," he said.

Property24