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Wednesday Apr 04, 2012

Property prices edge up, but at 'wrong' time

There was a slight improvement in the property market in March, after a long slump, but it's bitter-sweet, says Seeff Property chairman Samuel Seeff.

For just as a recovery beckons, consumers are being hard hit by hikes in fuel, electricity and rail costs.

"The (March) increase (in house prices) of six percent is significantly higher than the 3.2 percent achieved last year. The good thing about it is that it shows there is some new energy in the market.

"More people are buying homes as prices are slowly increasing. We find that more buyers are prepared to pay close to asking prices.

"Several agents also said sellers have recently become more realistic with their asking prices," said Seeff.

Seeff said the industry hit its first slump in 2007 after the introduction of the National Credit Act and its second after the global economic slump in 2008.

"The introduction of the NCA had a great effect on people attaining bonds. And the year after, the recession affected every industry.

"Now that things are looking up for our industry, people have been hit with increases in petrol prices, electricity, higher municipal rates and the increase in food costs."

He said he would be able to establish by June whether the market was gaining momentum or not.

This year, Seeff recorded its best February in four years with total sales of close to R900 million, up by more than 28 percent on last year.

Seeff added that although the company will not, for the next five years, see the 22-35 percent price hikes it saw before 2007, recovery would gradually take place.

According to First National Bank, house prices in March showed the biggest improvement for sellers since June 2010.

"The FNB House Price Index showed a further slight acceleration in March, up from a revised February growth rate of 7.1 percent to eight percent year-on-year," said FNB property strategist John Loos.

He said the February index showed an increase of 0.9 percent year-on-year, with consumer price inflation (CPI) in February slightly lower than house price growth, at 6.1 percent.

Cape Times


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