Real Estate Investor Magazine South Africa October 2018

EDITORIAL VIEW Over 96% of sellers need to drop their asking price to conclude a sale and 7,8% are selling for reasons to emigrate. Twelve weeks to sell a property characterises the general standard sales period in the mar- ket. The current average is at just over 14 weeks. Johannesburg and Ekurhuleni are doing better selling from 12-15 weeks and 11 weeks in Pretoria. Cape Town is 15 weeks, but longer for upper end areas, according to Seeff Properties. Durban (Ethekwini) and Port Elizabeth (Nelson Mandela Bay) still lags selling notably at a much longer 21-22 weeks. Secondary home buying is expected to improve, but is still around 13% (from 20% in the pre-2007/8 boom period). Foreign buying, also mooted for an uptick, still sits at just over 4% of all residential buying with even buying from the African continent down due to weaker economic conditions on the continent. Expat buying remains low at 1.5% of all buying. Although the economy and property mar- ket is showing improvement, it is still all about property buyers. We wait for more positive sentiment to translate into a meaningful increase in investment activity. Sentiment is starting to turn and indica- tions are that we are on the up. Consum- ers have had to absorb the effects of high inflation and added to that land reform uncertainty on the expropriation without compensation. The recently launched SA Retail Snapshot Q2:2018 Broll Report highlights current retail consumer pressure, with shrinking salaries, VAT increases, petrol price hikes, escalating food costs and soaring elec- tricity fees, which all have a direct impact on the local property industry. Today’s extremely discerning consumer carefully “ considers how they spend their diminish- ing disposable income. This core insight confirms the need for game-changing moves but yet still sticking to the basics of growing your wealth in these tough times. We have to remain upbeat about the year ahead. Economic improvements are filter- ing through encouraging steps taken by President Cyril Ramaphosa on new for- eign investment drives. Investment tips for dealing with a recession are sticking with your plan, consider offshore investment and understand where the value and op- portunities in cash flow behave in tough times. Don’t get emotional about the situ- ation and focus on the long-term. Successful investing NEALE PETERSEN FOUNDER/PUBLISHER BO BENNETT As sure as the spring will follow the winter, prosperity and economic growth will follow recession “ S outh Africa is in its first technical re- cession in nine years. This means the economy has been in negative growth for two quarters. We all know markets have cycles of both up and downturns. The latest statistics from FNB’s Property Ba- rometer show that real estate growth will be poor and house price growth rates will only be between 3 and 4%. The Western Cape in particular faced the double chal- lenge of a decline in semigration buying and the drought. Both has had a drastic downward effect on price growth slowing to just 1.5%. If you consider that inflation is currently at around 6% this means that there is currently negative growth for many investors and owners. How to Stay Ahead in Recessionary Times SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2018 3

Real Estate Investor Magazine South Africa October 2018 | Page 5