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Thursday Oct 20, 2011

'Property trends to watch out for'

While the global property market has taken its fair share of knocks over the past few years, it's safe to say the South African market is still emerging and opportunity is out there for property investors that look for it, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

"Many buyers and sellers tend to see the market as a separate entity from themselves when in fact the market is made up of buyers and sellers. Simplified, the market can be defined as those people trying to buy at low prices and sell at high prices. Sentiment in the market and how consumers feel about the current market will largely dictate buying patterns and trends in that very environment. The secret to making the most out of the real estate market is to understand people and watch the trends and sentiment to see when buying or selling is the most advantageous," says Goslett.

According to Goslett, although technology may have changed and the tools used to search for property may differ, trends in the market have followed a very similar cyclical pattern for many decades. Knowing the pattern and seeing the signs of a changing market in a certain area will equip investors to better prepare themselves and gauge where opportunity lies.

Goslett says that predicting where housing prices will rise and where they will fall can be largely determined by watching the following trends that affect demand in the local markets:

  • Government policy and practice - Political unrest will have a large impact on buyers' confidence in the market as will reckless government practise that affects consumers, inflation and the interest rate. Other factors that would influence the market would be the introductions of policies and acts such as the Consumer Protection Act, Capital Gains Taxes or most recently the controversial Municipal Property Rates Bill.

  • Overdeveloped areas - The overdevelopment of certain areas has led to many properties in those areas standing empty, which normally leads to investors being able to buy them at reduced prices.

  • Overcorrection in the market - Prices that have shot up in an area too quickly and are back to boom period figures will affect demand in that area negatively if buyers know that they can get more value for their money elsewhere. Once demand decreases in an area, so will the property prices which means that opportunities will begin to present themselves.

  • Employment and movement - Tracking the movement of major corporations can lead to property investment opportunities. When large corporations relocate, they normally bring with them a strong demand for property in that area, which is largely due to the employees of the company wanting to reside in proximity to their place of work.

  • Living the life - Aside from financial gain, another factor that influences the market in an area is lifestyle choice. Nothing drives migration to an area more than the pursuit of a safe and enjoyable lifestyle. Look at the cost of living in an area, the climate and leisure trends. All of these will have an impact on where markets may shift in the future.

    "While watching trends and buyer sentiment can give us an indication as to what the future may hold, it is impossible to predict with any real certainty. Perhaps the only real certainty in any market is that it is constantly changing," Goslett concludes.

    RE/MAX Southern Africa Press Release

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