WC not big property factor - survey
14 Jul 2009
South Africans who think the upcoming Fifa Soccer World Cup will be giving the housing market a boost, are building castles in the air.
Although foreign property markets have benefitted from international sporting events in the past, property experts say the timing of the World Cup is not ideal.
A recent survey by the property portal propertygenie.co.za showed that 41% of the respondents are of the opinion that the event will boost property prices, while 59% said it won't.
Out of the 59%, 27% said the reason for this is that house prices are too high, 20% said SA isn't the best place to buy, while 19% blamed the worldwide credit crisis. Furthermore, 18% said the World Cup won't draw enough people to have a positive effect and 16% think the weak economy will override the benefits.
Johan Strydom, managing director of propertygenie.co.za, says the results are interesting because they are a reflection of what South Africans think. "But because a sporting event of this magnitude hasn't been hosted in SA yet, the positive effect on the economy and also house prices could come as a surprise," he said.
He believes the world economy will be in a better state when the tournament kicks off.
John Loss, property analyst at FNB's home loans division, is sceptical of any upswing in house prices given the current economic climate. "The picture would have been different if the World Cup took place in good economic conditions when property was still a buzzword."
He says any improvement in house prices in 2010 will be mainly due to an economic recovery and the positive impact of the lag effect of lowered interest rates. "But there won't be any fireworks."
The survey also asked which properties will benefit in terms of price growth and 32% said it will be residential units in Cape Town and 27% reckon it will be beach houses across the country. Twelve percent said no properties will benefit.
Recent research by Lightstone showed that foreigners owned a meagre 0,56% of SA's total residential property stock. The research clearly shows the extent of foreign ownership in SA is exaggerated and that house prices are largely driven by South Africans.
Loos says this will also be the case in future. He says the Soccer World Cup will probably not contribute to house price growth, but it will help improve the long-term perception of the country, especially if it can be proven that such events can be hosted successfully. - Elma Kloppers, Sake24
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