Next boost in property market might only come after World Cup, writes Isaac Moledi
Property owners who want to catch the next boom in the property market should wait until 2009-10, said Keith Wakefield, chief executive of Wakefields Estate Agents.
Wakefield was speaking to 200 delegates at the company's recent yearly conference in the Drakensberg. He told them that the boom will mean substantial price increases and will have nothing to do with the Soccer World Cup.
He raised concerns about the current rise in building costs and lack of skilled labour.
The demand for construction companies, skilled builders and building materials, as a result of major infrastructure developments for 2010, has created huge shortages and was pushing prices up substantially.
Wakefield said that over the next two years the gap between new and existing properties would widen because building costs were increasing at 20percent a year and property prices were rising at between 6percent and 15percent.
"Not so long ago building costs were about R3000 a square metre.
"Today building quotes are anything from R5500 to R8000 a square metre or higher depending on the finishes," he said.
What this does, he said, was widen the gap between new and old property.
According to Wakefield, we are moving to a position last experienced in 1998.
"I predict that we will be in for substantial increases again around 2009-10," said Wakefield.
He also expected building costs to go down after 2010 once the capital projects related to the Soccer World Cup had been completed.
Looking at the property market for the remainder of this year and into next year, Wakefield said he expected a further slight increase in interest rates soon "but nothing to get worried about".
Market activity at all levels would remain buoyant for the foreseeable future because of the demand from the growing black middle class.
But, Wakefield said, price increases in houses costing more than R1million would be between 6percent and 10percent. Those costing less than R1million level would be more than 12percent.