Tony Clarke, the Managing Director of the Rawson Property Group, who returned recently from a three week trip to the USA, said on his return that he was surprised to find that South Africans involved in property trading have not yet realized just how satisfactorily the local residential market is performing, considering the difficulties it has had to overcome, when it is compared to many of the western world’s residential markets.
“The latest Knight Frank Global House Price Index shows that in real terms (i.e. allowing for inflation) in many countries, negative growth has been evident for anything up to two years. Irish residential property declined 16,3% in value in the last year, Portugal is down 9,8% and Spain 7,3%. The truth is that all the Eurozone countries with high national debt have seen drastic drops in house prices.”
Even in the USA, now showing signs of recovery, said Clarke, Knight Frank’s figures indicate that house prices have dropped year-on-year by a further 1,9%.
In South Africa, said Clarke, the situation is significantly different: the latest FNB Segment House Price Review shows that house price increases are now taking place at an average rate of 8,1%. This means that in real terms increases are now at around 3% year-on-year.
Particularly encouraging, said Clarke, is that the year-on-year price increase growth in full title homes in the second quarter was 10,3%, while sectional title homes appreciated at 5,1%.
FNB, said Clarke, comment that sectional title units are now ‘playing catch-up’.
“Nobody,” said Clarke, “is claiming that we are in a bull market or that this is a full on recovery phase. However it is clear that outright pessimism is no longer justified. The South African market, looked at from a global viewpoint, is positioned roughly halfway between the underperforming Eurozone countries like Greece and Ireland and the top performers like Brazil, India, Austria and Germany. All things considered, therefore, our market remains a good one in which to invest and it can be stated with some confidence that any house price purchase made now in South Africa is certain to prove a good investment.”
