South African Property Market – What’s Happening, kwenzakalani?

The South African Property Market is hard to define, turbulent at times; and yet in the long run, proven to be astoundingly prosperous for the future investment.
Let’s have a look at some of the contributing factors that are forcing this market to be in such a state of flux….
By far the most prominent factors are that of the National Credit Act, our sea- saw like inflationary figures & the dark cloud that is this current economic climate.Although these factors are certainly the harsh realities of the day, you will probably need to look at more than just those to have a better understanding about what is happening in the property industry in South Africa at present.

Let’s take a look at the current Economic snap shot

Although at times we tend to think that we are the only country battening down the hatches & weathering this global economic storm, you will find that South Africa is in much the same ocean as the rest of the world. Countries such the USA, the UK and Australia have all been reporting varying degrees of reduction in property pricing growth. Although the slowdown in South Africa started taking place well before the US mortgage market crisis, resulting in a confusion and disturbance which has somewhat contributed to a steeper drop in our property pricing growth during October, November and December last year.

The South African Economy: In spite of economical growth, our inflation rate has remained above (and sometimes well-above) the 6% edge since April last year, with soaring oil prices, quoted as some of the culprits. In order to bring inflation back down to within the targeted range, the Reserve Bank tightened up on their financial policies and increased the repo rate.

Through the Investor’s eyes

A Buyer’s Market: 2008 hailed the return of the Year of Good Bargains. With 2009 being the year of re-strengthening and growth, still abundant with good deals to be sought.
As a result of the existing economic factors, the supply of property is greater than the demand. This means that you are likely to find yourself in a position to drive really good bargains what is of essence is that the property is in the right location and that there are no land claims pending.Where you choose to battle also holds true in the property industry. According to the experts, there are some property classes that could produce excellent yields in the coming years for those investors with the insight to board the bandwagon early enough.

In Conclusion

2009 could see the birth of a brand new cycle. Until then, it will probably get a whole lot worse before it gets better. If you can ride out the storm and use the window of opportunity it presents to your advantage rewards that may be waiting when the skies eventually do clear.