Residential property prices in South Africa are decreasing
FNB's Property Barometer for July 2018 has showed that residential property prices in South Africa are dropping and the average time it takes to sell a home is increasing.
According to FNB’s Property Barometer for July 2018, property prices have consistently decreased since 2016 when factoring in inflation. FNB predicts house price growth to decline further within the next year. The report shows that as of May 2018, real house prices have declined by -0.05% year on year.
John Loos, household and property sector strategist at FNB, says that these results “commenced on the back of interest rate hiking at the time, along with a broad economic growth stagnation from around 2012.” Despite stagnant economic growth trends, growth is predicted to increase slightly to 1.6% next from 1.3% this year.
Experts believe while 2018 started off positively in terms of the countries political situation, and the property market gained more attention and in turn prices increased, the second quarter of 2018 show continued economic stagnation and a slow down in price growth due to weakened industry activity.
FNB’s estate agents survey reveals that as a result of this, it now takes an average of 16 weeks for a property to sell, up from the an average of 14 weeks at the beginning of the year. This has led to a possible oversupply in properties on the market. This oversupply is not likely to be bought up soon with South Africa’s economic growth on a slow upward trend.
With South Africans hesitant to make such big financial decisions such as buying a house until they can see the economic situation is more stable, the property market will continue to lack interest from buyers. While this is so, the water crisis in the Western Cape, Eastern Cape and even Johannesburg and Durban from time to time, has not deterred people from buying or building as water-wise features have become readily available.
