With the Soccer World Cup and its six week hiatus of business inactivity firmly behind us, the residential South Africa property market looks set to grow once again, with Leapfrog Property Group citing a 33% increase in sales for July. Seasonal factors are also culminating to bring a more positive outlook to the market and agents across the country are citing a steady return of qualified buyers back into the market.

This is according to Bruce Swain, Managing Director of Leapfrog Property Group, who stated, “Demand in the price ranges up to R750k remains strong as this is traditionally a market where there is a shortage of stock, although affordability had a significant negative impact on sales in this segment over the last 12-18 months. That said many of our offices catering for the upper end, luxurious end of the market have had record months especially in Pretoria and Sandton.”

Another important indicator of improving market conditions is the return of South Africa property developers with an appetite for residential developments. Research from Absa Home Loans says that while residential sector building statistics indicated that conditions in the building and construction sector would remain tough in the short term, there were forecasts of improved levels of activity towards the end of 2010 and into 2011.

Bruce believes however that a further rate cut is necessary to bring affordability back into the South Africa real estate market and cement long-term stability, saying: “Consumers are still in huge debt and liquidity remains a significant challenge. As consumers start working their way out of debt to regain a semblance of financial stability, they are hesitant to make the commitment to get back into long-term debt again. It remains a double-edged sword for many - while prices for property in South Africa have stabilised and are likely to increase over the next six months hence the need to get back into the market sooner rather than later – they also realise that we are nearing the bottom of the interest rate cycle and can probably expect increases in the first half of 2011.”

Reports from Leapfrog’s 50-plus franchises cite that the number of buyers is definitely starting to outstrip supply in many areas. “There is also big improvement in the lending environment compared with the lowest point in 2009 when only around 30% of bond applications were actually being granted. The bond size approvals has also increased and decline ratios have dropped to 40%, however buyers still have to be realistic about the fact that their indebtedness and credit history are deciding factors in the granting of a bond. For now 100% bonds still remain elusive and South Africa property buyers should plan to put in at least 10% equity in the form of a deposit,” adds Bruce.