South Africa appear house price boom
Tag: South Africa, South Africa house, South Africa house price
Summary: The cost of South African real estate has risen by 161% in the past decade according to new research out this week from Lloyds TSB International, despite the market remaining very unstable.
The bank’s findings show that South Africa’s residential property market has experienced the third highest price gains in the world in the past 10 years.
with only Russia and India showing a higher average rate of profit growth. The market finished 19th out of 52 countries surveyed worldwide with the average South African household income up 4.6 per cent during 2011.
The cost of South African real estate has risen by 161% in the past decade according to new research out this week from Lloyds TSB International, despite the market remaining very unstable.
There are dark clouds on the horizon, however. The country’s soaring unemployment rate grew to 25 per cent in the third quarter of 2011 and house prices have slipped 1.1 per cent in the past year.
"No improvement is expected until the gap between house prices and two of their key determinants - incomes and rents - starts to shrink and the excess supply of new homes built in many locations during the boom years prior to 2008 is absorbed," says the Knight Frank Global House Price Index for Q4 2011.
Elsewhere, the Global Property Guide has indicated that a rise in inflation may indicate a period of decline for the country’s property sector, as interest rates were brought down to 9 per cent, the lowest since the 1970’s, after a series of cuts between 2008 and 2010, however they remained stable in 2011.
Mortgage rates are expected to rise by a cumulative 200 basis points in the first two quarters of 2012. An article featured in the publication showed that although house prices increased by 2.3 per cent in nominal terms, in real terms they actually fell by 2.6 per cent. The consumer has been cited as the main reason for the decline which stood at 6.3 per cent.
Samuel Seeff of Seeff Property Services says that despite these figures there is still interest in the South African market, “The market is moving slowly and prices are under pressure, but there is still activity.”