Property Talk

Author: Andreas Wassenaar
Date: 2014-06-20

Are you an optimist? Stephen Covey introduced us to the 90/10 Principle. This idea says that 10% of life is made up of what happens to you - the things you cannot control, but that 90% of life is decided by how you react, and this you have complete control over.

As a property professional there are things I have no control over. Interest rates, striking miners impacting on our gross domestic product, or a global financial crises. While it may be instructive to be aware of what is happening outside your sphere of influence so as to be ready for the opportunities that may present themselves, it is of little value to dwell on these things.

I was recently asked if it was a good time to sell and emigrate. I was surprised by the question as my mindset could not be further from this frame of thought. I cannot think of a better time in our recent history to be part of the poised growth of Africa and to have the privilege of living and working in South Africa.

The hammering of our recent gross domestic product growth and the recessionary talk that has been pervasive in our media simply spells opportunity to me. I will talk you through 12 current key property economy statistics and explain why I interpret this data as positive and an opportunity to profit through property:

1. Household sector real disposable income growth hits 2,5% representing a steady decrease over the past two years. I note this but realize the flip side is that property prices will remain subdued which helps me find the best possible buys.

2. Household Debt to Disposable Income Ratio down at 74.3% from the peak of 83% in 2009. This is a big improvement and means that household balance sheets are stronger. Interest rates at 9% remain the lowest in 40 years.

3. FNB Residential Demand Strength Index is steadily up from 2009.

4. FNB's Residential Market Activity Indicator hits 6.76 - a level closer to the pre-2009 recession levels - good news!

5. FNB Residential Supply Strength Index - moving up and still stronger than demand indicating overall adequate stock levels and new stock coming on stream.

6. Agent Stock Constraints reported by 18.5% which is the highest over the past 7 years indicating the people are buying up the stock of existing properties and the back-log of homes is shrinking. This will mean that homes that have been on the market for a while in certain areas should now be trading.

7. Average time a property is on the market (nationally) sharply down to 13,6 weeks and heading downwards.

8. Proportion of properties sold at less than their asking price is now 81%, which is down and heading south supporting the view of increased demand being prevalent.

9. Average percentage drop in the asking price to secure a sale is down at 8% - a big improvement on the 13% recorded in 2011.

10. Affordability of housing has steadily improved over the past 7 years as measured by the average house price index over average labour remuneration.

11. First time buying activity is now at 25% and growing - a sign of a more active property market.

12. The proportion of buyers buying to let is slightly higher at 9% (from 8%) but remains low, which is a great buying opportunity to take advantage of the higher rental yields.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

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