South Africa property market affected by ongoing recession

 South Africa’s property market  has been on a steady decline for some years now. Property economists in the country have attributed this to the ongoing recession.

According to FNB’s house price index, there is a growth of 4.7%. This is below inflation and as a result may force sellers to sell their houses at a loss.
For instance, a person who bought a house in 2001 and sold the house now could make a sizeable profit of anything up to 50 or 60%. However, a person who bought a house last year and was selling it now would be making a loss.
According to John Loos, one of FNB’s economists, with the lower demand to buy property, houses stayed on the market longer. The fact that most that sellers refused to lower their asking price for fear of making a loss is also proving to be problematic.
Loos said that the stagnant economy, coupled with the ongoing social tension in the country does not bode well for the future as it will create political and economic instability.
Another economist, Professor Bonke Dumisa, said sellers were holding on to their properties for longer in the hope that they would get a better price. He said they had become reluctant to sell. He further advised people to buy as the prices would be relatively lower, owing to the low demand and oversupply of houses.
However, gated estates seem unaffected by the economic times, a fact Dumisa attributes to their being generally well off.
Keith Wakefield, of Wakefields estate agents, said the property industry was not immune to what happened in the economy; house volume sales were down.
Wakefield said the downturn in the economy would make it harder for people who wanted to buy property to get loans for bonds, even though the banks were keen on supplying them.
Sellers should have realistic prices. Just as well, since people with overpriced homes who failed to take into consideration the current market-related prices would incur difficulties and may be forced to drop the price eventually.

Posted on : 03 Jul,2017

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