While it is quite expected for different analysts to take different opinions on a particular market based on the same set of statistics, the rapid reversals of opinions that many analysts have had regarding South Africa in the last week or so is quite remarkable in the vigour that they bring to the table.
A few days ago, a report was released that cited good times in South Africa for 2008 and expected that the market would continue to gain strength as the year drove on. However, a report released today by the Middle East North Africa Report paints a very different picture; a picture of a South African property market that is doing everything except gaining strength.
This report says that figures of South African property market inflation are somewhat misleading in other reports and when adjusted for currency values actually only represent an increase of 3.7% rather than the double digit growth that many of the other analysts had cited as reasoning behind projecting a strong 2008 year for the South African property market. If true, that figure suggests a grave slowdown in the South African property market as 3.7% inflation over the 2007 year is quite different from the double digit growth rates that the country enjoyed for the previous five years.
The report blames higher government regulation regarding loan approval as the primary culprit for the property market slowdown, as well as higher interest rates and protective tariffs put in place that prevented a lot of foreign property market investment that otherwise might have happened without those measures.
The report does conclude in a positive light however, suggesting a number of things that might occur that would put its projections for 2008 in line with the projections of other analysts. These include government changing the system of tariffs as well as simplification of the interest rates in the country.
Ultimately, however, the things cited as being necessary for good growth in the report could be difficult to achieve considering the fact that many property corporations have already cited a quality supply shortage for being a potential problem in the upcoming year. The government currently has no plans to deal with that situation.
