South African Homeowners not in Storm Alone | Property News | Market Updates

South African Homeowners not in Storm Alone

Hard-pressed South African homeowners at least have the consolation of knowing that they are not alone in battling with a poor property market and that inevitably conditions will improve.

That's the view of Mark Friend, vice president of Realogy Holdings, the holding company for a number of leading real estate organisations including ERA. On a recent visit to South Africa to meet with agents and management of the ERA South Africa group, one of the most successful of the Realogy associate companies, Friend said tough local conditions mirrored the rest of the property world.

His areas of responsibility include Australia, Africa and Asia. His perspective on the markets of these regions is therefore based upon first-hand experience. "The drivers in these respective markets are uncannily similar, driven mainly by poor business conditions, credit restrictions, high interest rates, mounting inflation and declining consumer disposable income. "These conditions are making life difficult for stakeholders in the property markets of all three regions for which I am responsible, and the assumption that somehow property owners are worse off here in South Africa, than, say, those in Perth, Sydney or wherever, is totally incorrect."

In fact, the South African market is arguably more stable due to the early introduction of the National Credit Act (NCA) which helped the country avoid the direct effects of the sub-prime mortgage crisis that has so bedevilled the rest of the world, he says. "South Africa admittedly has to deal with political uncertainties arising out of the Zimbabwe situation and in-fighting among the ruling party and that has a lot to do with market sentiment.

"On the other hand, you have an enormous 'market in waiting' in South Africa among potentially millions of South Africans who aspire to first-time home ownership. No other country in the world is in this happy position and the coming years could see an unprecedented housing boom in this respect, with positive ripple effects throughout your economy.

"And all things being equal, the property cycle will turn. In the interim, with your economists predicting the start of an improvement late next year, it's vital that homeowners use every option they have to stay in a market that has persistently demonstrated its resilience over time."

Realogy Holdings, 20-10-2008

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