At the annual Rode property conference held in Sandton yesterday, experts said that the market had entered a long period of stagnation and that there was very little in the way of good news for property.
"We can assume that the extraordinary times are over for now and that we have entered a long period of stagnation," said Erwin Rode at the conclusion of the Rode annual property conference in Sandton yesterday.
Rode's message was that 'timing is everything' and that the day of reckoning has arrived for almost all sectors of the South African property market, with the exception of the non-residential market where he believes the current boom is intact.
The conference was bigger than previous years with around 200 delegates in attendance. Speakers included economist Mike Schussler of T-Sec and twice winner of the economist of the year, who highlighted the challenges facing the South African economy in the context of the global slowdown.
"This time around the property market might be the last to recover," said Schussler, adding that there was however always market share to be found if one looked hard enough.
Independent consultant Dries du Toit presented property as the fourth asset class after cash, fixed interest and equities, and named falling business confidence, emigration and proposed land reform legislation as some of the risk factors facing the property market at present. He also said house prices were likely to drop by a further 10% to 15% in the coming twelve month period.
Dr Andrew Golding of Pam Golding Property Group said that "there was absolutely nothing happening in the residential property market" but that there was much to talk about all the same.
"House prices have fallen more this year than in any other year since the great depression," said Golding, "and many countries are finding things much tougher than in SA." South Africa is facing a 'perfect storm' he said, comprising global factors and local influences such as the withdrawal of foreign buyers, the NCA, confusion over legislation and the Zimbabwe issue.
"We have seen a 30% - 50% decrease in sales year on year, in line with global trends," he said, "and the one positive aspect of this is that prices are coming down which has improved affordability implications."
Fractional ownership started out at the wrong time, said Golding, and the market is now very thin. The top end of the residential market still seemed to be escaping the downturn, and statistics showed that the Western Cape had both the strongest performing provincial and metropolitan markets in SA. Freehold outperformed sectional title, mainly as a result of the oversupply in the sectional title market.
Martin Venter, CEO of Elements Development Projects asked the question "What went wrong globally in the past twelve months" and suggested that the real culprits were the rating agencies such as Moody's, Standard and Poors, Fitch etc.
"If their assessments were accurate," he said, "then Bear Stearns should have been down rated long before they got to the point of folding." Venter believes there are opportunities in property all over the world and that confidence will return, even if it takes some time.
Des Hughes, MD of Basil Read developers, spoke about the lessons learnt through the Cosmo City project and said the company had future plans for a further three similar developments.
Delegates spoken to found the conference sobering but realistic, and several said they did not believe the situation was as serious as the presentations seemed to suggest. A small number voted that SA was still on track to becoming a 'global miracle' although the majority leant towards the more moderate 'African Dream' scenario presented by Dries du Toit. – Tracey Sandilands
