There is hope for the SA property market.

South Africa is unlikely to see another residential property boom in the foreseeable future and a full-scale revival in residential property is probably two to three years off.

The turnaround point and the beginning of the upswing have already been reached and several encouraging signs are now already evident.

The first of these is that the US economic indicators are pointing to the "official" recession coming to an end in the third quarter of this year.  This means that South Africa, which traditionally lags six months behind the US, could find itself in a far better position by March/April 2010.

The second helpful indicator is that the banks are very definitely now beginning to loosen up on their attitude towards bond applicants. 

Whereas before, at one stage, they simply did not look at bonds, now they are open to discussion.  It seems that they have gained confidence from the lower interest rates and the more positive scenario that this has ushered in.  At Rawsons, seeing signs that:

• struggling bond payers are now coping far better and are catching up on their arrear payments,
• the number of bonds issued is increasing,
• those who have resigned themselves to a long stint of renting are now once again considering becoming home owners.

Most importantly, sellers are now genuinely adjusting to the real world, not setting mythical prices.

Interest rates are bound to drop further (by up to 1% this year) and this will widen the property buying market.

The current problems have resulted in almost 60 000 agents countrywide having to leave their jobs and in many agencies amalgamating to cut overheads.  As a result, the bigger Rawson franchisees have been able to recruit some highly skilled staff who are definitely capable of raising the standards wherever they work.  Rawsons had also witnessed a number of independent agencies applying to become Rawson franchises. 

This suits us because now that franchisees have to be fully qualified, it is very difficult to sell a franchise to an unqualified buyer.

A particularly hopeful indicator is that the Zuma cabinet now has a Ministry of Human Settlement, headed by, Tokyo Sexwale who on the face of it all,  has all the right credentials for the job:  a track record of delivery, a willingness to involve the private sector and a successful business management background. 

The official backlog on housing is now two million units but the real figure could be well over five million.

A minister determined to crack this problem could, we believe, easily build two million homes or more within the next three years.  Should that happen the entire economy will benefit:  the spin-offs, particularly for increased employment will be huge - and the greater stability and prosperity of the recipients will also boost the economy.

The combination of lower interest rates and ultra-low prices make this an exceptionally good time to get into property. 

What those new to property purchasing have to appreciate is that those of us who have been around for 30 years have seen much of this before - and we are not too fazed.  The 1992 recession produced conditions that in many ways were worse than those now evident but homeowners and the good agencies came through.  What we have learned from these previous experiences is that property always survives the storm better than most other classes and we learn to operate leaner and more efficiently.

Accepting, therefore, that the next interest rate rise is still over 18 months away, now is the time to build a property portfolio.

* Bill Rawson is chairman of Rawson Properties

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responses to this article

Please request Could somebody who knows bill please ask him to stop trying to fool the masses? by Raw son on June 03 2009, 13:00 Find this comment inappropriate? Report it

@raw son He's telling the truth as long as you read the first paragraph and only the first paragraph. So why should anyone buy right now? by Junkyard on June 03 2009, 15:38 Find this comment inappropriate? Report it

Is this a article or a advert? Bill Rawson wrote a article complimenting his own franchise so his predictions and judgement comes into question. by WTF on June 03 2009, 18:35 Find this comment inappropriate? Report it

Brand building vs Brand Equity Bill says and I quote, "The turnaround point and the beginning of the upswing have already been reached and several encouraging signs are now already evident." The only sign I want to see on the road how far are we from the bottom and which way is . .more it. I don't think it's behind us. Further just because more houses are being sold in the US does not mean that prices have bottomed or increased for that matter. I envisage "quicker " stressed sales at lower prices and in bigger numbers now that Uncle Tito pulled the plug on interest rates. Average Joe still can't shake a bond loose. An interest drop will still not help you pay your arrears if you three months behind like many homeowners out there. If we still on our way down we can't be on our way out. The is an advertorial. Nothing wrong with that but if Bill is wrong he puts his company in a bad light, which in turn reflects on all his agents trying to capture market share. I have alot of respect for Bill Rawson, a self made man, a brand in himself but these statements put his brand equity at risk. There's always a price for being wrong. . .less by X Agent on June 04 2009, 06:38 Find this comment inappropriate? Report it

Slower than slow Rawson.....thats like saying.......in 3 years time i'll be older! you're a prize chop! any fool with an absolute BASIC understanding of economics,cyclical behaviour,consumer behaviour and banking lending practices will know that in our current state . .more ITS QUITE DIFFICULT TO DO ANY WORSE!! well done! you're a real winner! like a deer in the headlights .caught.TRYING TO TALK UP THE MARKET! oh hang on......like most of your ilk! . .less by Super Duper on June 04 2009, 08:53 Find this comment inappropriate? Report it

2 years from peak after 8 year bubble - too soon for bottom In the UK during the last housing down turn, there was a small blip up and everyone was celebrating that the end was over. It lasted a year and then plummeted further for another 3 years. It looks like the same is happening over there now. The . .more affordability ratios and the income to house price ratios of first time buyers confirm that there is still substantial downside to come. The stock markets have risen driven by speculation mainly. Again, during the 1030's depression, there were 5 periods where the stock market boomed 20%. I think the equity markets still have further to crash. As I have repeatedly said, the SA real house price bottom gets hit about 3 years after the US if history repeats itself. The rent / house price ratio in SA indicates there are more drops to come. In real terms we need another 30 or 40% fall. Houses are still not affordable. Credit is tight. Salaries are under strain. So sorry Bill, now is not the time for building property portfolios. Nice try though. . .less by Sad days on June 04 2009, 09:13 Find this comment inappropriate? Report it

@sad days excellent commentary. i'm continually amazed at the vehemence at which "estate" agents try to find hope where there is none. for the average person to save for a deposit for an average house means they need about R130 000. considering that I doubt that . .more those "average " people, after paying rent, and all other expenses will save more than R3000 pm, well thats over 40 months of saving.... so guess we're more than 3 yrs away from the so called "house price growth".... agents,........try again. . .less by Super Duper on June 04 2009, 10:05 Find this comment inappropriate? Report it

I agree I am no fan of Mr Rawson, or his agency. However, apart from Bill's shameful blowing of his own trumpet (but who wouldn't, given the same opportunity), there is nothing wrong with his article. The market has bottomed, prices are not in . .more freefall, and bonds for creditworthy individuals are easier now than they have been in the last 12 months. He knows it, I know it, and most active agents know it too. The only ones who don't know it, are the REW armchair experts. Bash agents all you like, but open your eyes before opening your mouth (or pounding the keyboard, whichever is applicable). . .less by falco on June 04 2009, 10:14 Find this comment inappropriate? Report it

Easier to get bonds? We've been looking to buy a house for a year and have gone through the bond application process several times now (long story). Anyway, three months ago we qualified for a bond of R1,04mill. This week, one bank was willing to give us about 600k - after we . .more jumped through about 18 hoops. The others won't look at us because we run our own businesses (so called "self-employed"). We have paid off all our debts (and paid cash for our car and motorbike). I don't know what more they want us to do... well, it's obvious that they simply don't want to give out bonds. I'm now sitting on a wad of cash (I sold my flat to pay deposit and transfer costs) and no way to get a realistic bond. Any ideas on where I should put the cash? . .less by Michelle on June 04 2009, 10:44 Find this comment inappropriate? Report it

Hot tip for Michelle on where to put the cash number 3 on the 16:30 at Turfontein by Fast women and slow horses on June 04 2009, 11:33 Find this comment inappropriate? Report it

Michelle's bond The banks have become very sticky with bonds for self employed individuals, because they have recently identified this group as having a high default profile. Right or wrong, that's the way it is. Self employed can expect to be asked for 3 years of . .more financials, plus the usual bank statements, plus, plus, plus. Going through the bond process "several times" has probably not helped either, because each time you apply (for any credit), your credit score is negatively affected by the assciated enquiries on your credit report. If the business is relatively new, or financials are not in order, or the person is living out of the till (all too common), the chances of a bond on favourable terms are slim. . .less by falco on June 04 2009, 12:10 Find this comment inappropriate? Report it

To Falco: Nice try buddy! Now go find a job!!! Falco, nice one. Cant stop laughing... "bottomed"... LOL You thought we'd miss that one... we are FAR from the bottom... You certainly have not observed prices in below average, average and upper class areas. All are still living in a dream world . .more with only a handful (or less) bargains... the average house price is way more than the average person can afford... like 2-3 times more!!! . .less by CEO on June 04 2009, 12:20 Find this comment inappropriate? Report it

banks I think Michelle would agree that there's no speculation here! If Mr Rawson says the banks are relaxing their lending criteria then he should tell me exactly which one! The banks are no where near relaxing their lending criteria, in fact, they are . .more tightening it further! I fall in the low risk category (by the banks own analysis), I have no dept besides my credit card, which I'm using to build up my credit profile, and my car and I've applied for 220k less than I qualify for, but even after all of that I had jump through hoops to get approved. I dont make a hell of a lot of money, but my salary is anything but average. If I struggle to get a bond, then imagine what the average person out there has to go through. You can try and talk up the market all you want, but even if people who want to buy are convinced, there's very little they can do about it really. The best they can do is nod and say "I would buy if only I could get a bond'. . .less by noly on June 04 2009, 14:14 Find this comment inappropriate? Report it

Bonded Thanks for the feedback. This is the third time we've applied for a bond - no one had told us it would negatively affect our credit rating. Though I earn more than I did when I was employed and consider myself far more flexible and resourceful . .more than an employed person (who would probably wander about in a daze for several months if they lost their job, while I always have plan B, C and D lined up), I'm discriminated against. Two things you learn when you work for yourself: 1. control your spending and 2. you can always find ways to make more money. These aren't things that most employed people are educated in: they're far too coddled. Interesting how a (false) sense of security only gets you into more debt. We're certainly the only people we know who don't have any personal debt other than existing bonds. . .less by Michelle on June 04 2009, 15:19 Find this comment inappropriate? Report it

CEO By the time you've finished laughing, the property train will have left you behind. You say that houses are 2 - 3 times what the average person can afford. Which means that a house currently on the market for R1m, should be selling for between . .more 333k and 500k (333 x 3 or 500 x 2) in your opinion. Right? How many sellers of R1m properties will accept 333 - 500k? Exactly ZERO. Sellers don't care that "average" deadbeats like yourself can't afford to pay off a bond, or for that matter even get a bond. I truly hope that you are not a real CEO. That would be one business that would redefine the meaning of CRASH. I say it again: THE MARKET HAS ALREADY BOTTOMED, and just in case you still don't understand, THE MARKET HAS ALREADY BOTTOMED. Get it now? . .less by falco on June 04 2009, 15:53 Find this comment inappropriate? Report it

Agree with Falco MARKET HAS ALREADY Bottomed. OK, there'll still be some ridiculous bargains, but don't delay if you want one of these. Prices really aren't going to drop much further because in the main owners won't sell for less than they paid or think their properties . .more are worth. Those who are desperate sellers are still in the minority. . .less by Anon on June 04 2009, 16:34 Find this comment inappropriate? Report it

Bottoms Up If we have bottomed like some agents in the know feel has happened why are YoY prices still dropping. And if these figures have any integrity it shows that we have a long ways to go still. I don't think the buyer line has crossed the sellers line on the . .more magic technicolor graph yet. Where's the "gold rush" at? Really...If it has bottomed I'm going send Santa Clause a letter. While I'm at it I'll drop the Tooth Fairy and the Easter Bunny a line as well. Does anybody of you that are talking the market up have their email address's? There's that warm fuzzy feeling again. And if I'm wrong at least I'm writing this as an outsider looking in...I bet in about say 6 -18 months we'll read some fascinating reasons why the market had a false bottom just like our beloved JSE. Certain property markets/areas have higher cash content then others pending liquidity of sellers and buyers. When there's no liquidity, there's no where to go but down,down, down. Let's get some objectivity, work with the facts and stop distorting reality. You confusing the sellers and what are you going to tell them when you have to recommend a price drop after you got the mandate reassuring them Santa lives in the North Pole. Deal with the facts... . .less by X Agent on June 04 2009, 16:42 Find this comment inappropriate? Report it

Base prices Some say we have a long way down, I say we have already passed the bottom. Lets look at another example ~ sheriffs auctions. I think it is fair to say that everybody agrees that prices on the sheriffs auction are about as low as a buyer will find . .more anywhere, so why not take a look at the numbers. (Again, my area only) We buy properties in a very specific range ~ market value 550k - 700k, in certain complexes / areas only ~ fix them and generally get rid of them within a month. Mid to late last year, these properties were costing us 280 - 380k, excluding fees and arrears etc. The same type of property, same complexes / areas, are now costing 400 - 500k, ex fees and arrears. We are still getting our selling price, and in some cases adding a few thou to the price as well. Since Feb this year, we have only managed to get 2 properties below 350k ie. at last years prices. The point is ~ in CEO's example above, he says a R1m house should be selling for 333 - 500k. In my area, using those numbers, the owner would be better off letting the bank repo the house and sell it at the sheriffs auction, than sell it on the free market. Now who in their right mind can accept that as a viable option? . .less by falco on June 05 2009, 07:49 Find this comment inappropriate? Report it

Nice try Guys,,, Everyone I know who is spec ing thinks to hold for and after WC2010. Ever heard of a dead cat bounce? Too early to buy yet. by and Zen on June 05 2009, 09:08 Find this comment inappropriate? Report it

I feel it in my water The market is turning. by Dudu on June 05 2009, 10:00 Find this comment inappropriate? Report it

As per usual definitions are important Average salary is skewed by 25% unemployment who are mainly shack dwellers. They are not house buyer market they are RDP house market. The problem is lifestyle choice. People who supposedly have saved masses of money by renting instead of . .more buying can afford a starter house right now and could even afford to do so in the past. The property may be in the Cape Flats or not so desirable area or small but its doable. Hoever the people who rent in high end golf estates or lifestyle estates think they are entitled to and can afford that lifestyle. Thats where their figures break down because their income does not match their lifestyle. Nothing new, just people making the same generational mistakes. Maybe its genetic. Rich get richer, poor get poorer. . .less by Tuscanite on June 05 2009, 10:14 Find this comment inappropriate? Report it

Oh my word - Falco is the last of the flippers I thought they got wiped out long ago - the fact that there is still one left standing just goes to show that this thing is far from over. by CJ says on June 05 2009, 10:18 Find this comment inappropriate? Report it

@Falco Falco, for the first time i'm not going to entirely disagree with you. I agree that i won't sell my house which i think is "worth" R2.2 mill for R700k as CEo suggests, however, as far as the market having bottomed out... only for those who have the luxury . .more of time when it comes to waiting for that elusive buyer who has a deposit and finance.if you're a desparate seller, well, you're doomed. then, not even the best "skilled " "estate " agent can do anything for the seller. I maintain, its about price now, not about the "skill" of the ":estate" agent. the banks have put paid to that. the reality is that the NCA should have been implemented years ago. might have saved a few people's houses..... . .less by Super Duper on June 05 2009, 11:05 Find this comment inappropriate? Report it

Wrong again CJ says My associates and I started flipping again. Buy at sheriff's auctions, coat of paint, clean up garden, flip them through agents. by Tuscanite on June 05 2009, 11:57 Find this comment inappropriate? Report it

Tuscanite has hit the nail right on the head. There are too many people who are living above their means, and expect to be able to buy in areas they cannot afford. If they went about things like we did in the old days ie buy the best you can afford, sit on it for a . .more few years, sell at a profit and upgrade, and so on, we wouldn't be facing this problem right now. It's the instant generation ~ I want the golf estate, and I want it NOW! That's where the problem starts. . .less by falco on June 05 2009, 12:02 Find this comment inappropriate? Report it

@Falco Base Prices Falco, I see your point, from what you saying property has dipped 40-50% in your area already. It's also the lower range of the market so your argument is how much lower can it go? Areas like these don't really have much price elasticity. There's still an . .more over supply of property though and the invidual buyers, possibly first timers are still not qualifying. There's still a gap. I'd like to know what these properties cost in 2002/3 because pass that date you possibily in trouble right now. Further up you have properties that still have juice left, their values have increased by the amounts your properties are valued atand more. The people have more credit/cash but sooner or later cash/credit will dry up. There's boatloads of people in arears and these are homeowners with credit cards, boats, bikes and cars. Their time is running out whereas your folks got ejected months ago because their backs were against the wall from the start. Lay offs, for closure...South Africa is not recession proof like most people would like to think. The juice is running out. A serious chunk of the young middle class including some older folks that took university loans out or counted on retirement funding through property are going slide back over the breadline. I'm thinking that's close to R100 000 extra interest payments for R1m props and CC's etc . .less by X Agent on June 05 2009, 12:20 Find this comment inappropriate? Report it

Why prices blip up during a crash It gives a breather for some of the houses to be offloaded. Suckers buy them thinking the good times are back. The people who bailed out are off the hook and walk away licking their wounds. The market then turns down again and the new suckers are the ones . .more who now take the pain. So instead of the original owner taking a 40% hit, he only takes a 20% hit and the new sucker also takes a 20% hit. The pain is shared, helping to lubricate the way for the market to fall. The suckers are once again the folk who buy off the flippers like Falco and Tuscanite. They are simple folk who believe the hype that the market is moving up again. . .less by CJ Says on June 07 2009, 08:56 Find this comment inappropriate? Report it

Here is an example in the US of what I am talking about http://globaleconomicanalysis.blogspot.com/2009/06/housing-math-bottom-seekers-neglect.html This house has been foreclosed 3 times in 4 years Bought june 2005 $ 635,000 Foreclosed Dec 2006 Bought to flip by estate agents for . .more $ 544,000 - failed to sell, foreclosed a second time Bought again for $ 440,000 - foreclosed again a third time Available now for offers under $ 200,000. Hasn't been lived in since December 2006 The house has been treated as an investment rather than a home. After 3 losses the so called investors are hopefully starting to learn their lesson - at this low price someone can now hopefully afford to buy it as a home for their family to live in. The US crash is a year of two ahead of us. Watch and learn. . .less by CJ Says on June 07 2009, 10:50 Find this comment inappropriate? Report it

Outlier examples are not general trends. We have been through basic statistics many times... outlier examples are not general trends. An old special forces motto used to be its better to watch and learn from the mistakes of others than making and learning from your own mistakes. We . .more are indeed watching and learning from you as you continue to dwell in the short term and appear to have no long-term investment horizon. With all the millions you have supposedly saved from renting these past few years and your amazing ability to find houses 50% and more off asking price, you should by now be able to buy a property as a frivolous lifestyle choice...makes you think... . .less by Tuscanite on June 07 2009, 11:09 Find this comment inappropriate? Report it

CJ Are you saying that we shouldn't make money off those who are willing to spend? What kind of salesman will tell a person not to buy? I buy a product at a good price, improve it, and sell it at a profit. What's wrong with that? My business makes . .more money, the contractors I use make money, the agent makes some comm, and the buyer gets the house cheaper than the current market price. At the point of sale, everyone wins. If the market falls further, that's not my problem ~ remember "let the buyer beware"? However, I cannot think of a single unit I have flipped, that is now worth less than it was at time of sale. . .less by falco on June 08 2009, 07:28 Find this comment inappropriate? Report it

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