One can only describe the performance of the property market during 2009 as dismal. So says Deon Lessing, marketing director of Betterbond, South Africa’s leading mortgage originator, who notes that the industry experienced an exceptionally tough year with a much bigger contraction than anticipated. The biggest challenge in the property industry during 2009, according to Lessing, was staying in business. “We experienced an abnormal low, hence the bounce back to some kind of normality, however we are still way below the previous highs,” he says. “While all of the challenges faced by the real estate industry in 2009 have not been resolved, important ones have.” Lessing says the fact that the LTV’s have been relaxed and we are back to 95% and 100% bonds is a big factor. “However the concession rates are still almost non-existent. Liquidity still comes at a price and bad debts are still high, hence the pricing of new loans at prime (10,5%) or even higher to ensure sufficient margin.” But, he says, those that have managed to keep their heads above water during these difficult times are coming out even stronger. He attributes this to less competition now that things are starting to pick up. Looking at property buying trends in 2009 Lessing notes that while there were no real differences throughout the segments of the market, cash buyers did increase to about 50% of all deals during the year, picking up properties at good prices. He also notes a fast-paced pendulum effect where the average time of a property on the market went up to 21 weeks and back to 16 weeks all within two quarters of 2009. Big issues for property in 2010 will be the quality of home loan applications, according to Lessing. “This,” he says, “means no loopholes and no short cuts. The lenders saw these during 2009 and insist on lending to those that deserve it. Banks will continue to be strict on lending criteria to ensure that they put quality on the books and stamp out fraudulent applications.” So where to from here? Everyone is hoping that the much talked about green shoots of recovery are real, but are cautious as they are aware that dramatic improvements in the market conditions won’t happen overnight. “We had a bounce back from abnormal low levels, and now we trust that there won’t be any other ghosts and that the recovery of the property market will be gradual and sustainable,” Lessing concludes.