The South African residential property market seems to be on a decline in comparison to previous years. The recent economic data released in April 2015 shows some slight improvement in the economy however the property market is not performing at its peak.
First National Banks’ (FNB) recent release of the housing price index shows a slow growth. The average house price has risen with 5.0% year on year. This is much lower in comparison to the 5.2% in April this year, revealing a continued trend of a slow year on year price inflation during recent months.
The statistics suggests that the months ahead are most likely not to experience any notable growth across the residential market. The property division leader of Park Village Auctions, Jaco Du Toit reported; “the fragile fundamentals that currently underpin the residential market, show that the year on year house growth trend is set to continue in the next terms.” However despite unfavorable conditions, past records show that South Africa’s residential property market always recovers.
Many local based property agents are still hopeful for the best outcome, although growth drivers seem to be lacking a severe price plummet is not yet anticipated. The current Rhodes report on the South Africa property market reveals that there is a strong connection that exists between the rate of unemployment and the house price rate.
Rhodes reported; “The robust inverses relationship between the unemployment rate and the house price rate confirmed that house prices are largely driven by the performance of the local economy, holding constant differences in new supply.”
The industrial property market is also losing its momentum because manufacturing levels are low, this in turn impacts the demand for industrial property. The retail property sector is however thriving. The Divisional Director of strategic retailing, Broll property group believes that fashion retailers will still continue searching for more expansions.
Although the business optimism levels have plunged by 30% since 2013, according to the latest International Business Report released by the international advisory firm, Grant Thorton, electricity blackouts, exchange rate fluctuations, poor government service delivery, pending legislature and inadequate skills are aspects that contribute to low levels of optimism for the future.
