Is the residential property sector going through the worst recession since the 1939-1941 slump ? or are the difficulties exaggerated?

Bill Rawson, Chairman of Rawson Properties, has said that in his view this recession is not as bad as those of 1969, 1991 and the 1976-1977 Soweto riots period, while Rawson?s MD, Tony Clarke, said this week that, although he does not foresee a real recovery for 12 months, some of his group?s latest sales figures have been very encouraging.

"We have a company policy of not revealing figures, but I can say that our sales in July were 57 percent up on those of June, which itself was a reasonably good month."

Clarke said that the only really reliable guide to trends in property sales are based on six months? performance but, here again, he said, the overall trends indicate half a year?s steady growth.

"Overall growth in the second and third quarters seems now certain," he said.

Asked to what he attributes this, Clarke said the banks are slowly easing up on their lending criteria and many indecisive, hesitant buyers who were hanging back waiting for signs that the market was at its lowest point are now investing.

"In general," he said, "they are taking twice as long as before to make up their minds and are much more demanding of value than previously but they are no longer just waiting."

Prices set to rise

Statistics and figures produced by Selected Property Services, a computerised properties for sale information facility supported by nine prominent estate agencies serving the Bloubergstrand, Table View, Parklands, Flamingo Vlei, Sunset Beach, West Beach and Sunningdale precincts of the Western Cape, indicates that stock levels are now lower than they have been for 24 months and that the homes on offer vary in price from R330 000 to R12.5-million, says Mike Abrahamse, franchise principal for Rawson Properties in Blaauwberg.

"Five to six months ago," said Abrahamse, "we had 600 plus homes on our stock list. We are now down 25 percent to 350."

This is significant, said Abrahamse, because it indicates that more homeowners are surviving the downturn and no longer need to sell their homes. This, in turn, he says, will lead to sellers no longer having to cut prices as drastically as before and prices will, in fact, start to escalate upwards.

"I see demand increasing soon to the point where it more than matches the supply. As the 'slack' gets taken up, prices will start increasing," said Abrahamse.

Another reason for supposing that prices are set to rise, said Abrahamse, is that it is now nine months since the first interest rate drop (in December 2008) and it always takes almost exactly that length of time for the benefits of such an interest rate change to be felt in the house market.

"It does not take a rocket scientist to predict that five successive interest rate falls since December will now start having an effect," said Abrahamse.

The first signs of a recovery in the US and European house market, said Abrahamse, have been evident for just over three months now ? and SA usually lags about six months behind these pace setters in the housing sector.

"All things considered, I am, therefore, willing to predict that the housing market in the areas we serve, and in SA generally, will come out of its winter hibernation and, encouraged by easier access to bank finance and lower rates, will move into a higher gear by the fourth quarter of this year."

What does this mean for the potential investor?

It means, said Abrahamse, that if they are serious about buying at the best possible price, they should do so in the next two to four months.

"We all know that the right time to buy is at the end of a down cycle or the start of an up cycle and that is in my view close at hand. I just cannot see prices going any lower in our area."