nominal property growth in SA

South Africa's property market may finally see better days, but only if home owners take the advice of real estate analysts.

South Africa posted nominal property price growth last year. The weak 8.7% increase last month, year on year, is the lowest record in over nine years. South Africa is currently in a buyer's market due to high interest rates and the National Credit Act. The pressure placed on the already weak market is causing a wide sweeping slowdown. Rising inflation left unchecked could lead to negative house price growth very quickly.

For investors, this could signal the perfect time to buy. In the next three to five years, the South African housing market could experience a complete reversal - that is if sellers begin to follow the advice of property experts.

Part of the problem with the property market is that many sellers are simply listing their homes at very high rates at the behest of unexperienced agents. Most sellers then refuse to reduce prices which has caused a glut of houses on the market. At the current rate, inflation will begin to take its toll on the market. To combat this trend, many sellers are being encouraged to take their houses off of the market and to hold until the market shapes up. Reduced supply may justify some of the higher home prices, although the market will still be considered a buyer's market for some time.

More effort is needed to attract buyers. Many buyers are being discouraged by high interest rates and the difficulty of obtaining a mortgage.

The energy crisis is also causing many buyers to sit and wait. The power crisis is manageable though, and time will provide a solution. Credit laws will only discourage buyers for so long. But if the economy continues to slowdown leaving both buyers and sellers strapped for capital, things could get worse before they get better.

Only time will tell.

BOOKMARK THIS PAGE (What is this?)