Property market indicators turn positive

Many different indicators are pointing upwards for the property market, suggesting that the worst may really be over.

Gerhard Kotzé, CEO of the ERA South Africa property group, says the first indicator is Absa's recent comments that although house prices are expected to decline further for the rest of 2009 and possibly into early 2010, the pace of the decline will slow.

"And research company Lightstone goes even further, noting that its National Repeat Sales House price indicator is still slightly negative year-on-year (y/y), but has nevertheless shown a month-on-month increase since January this year.
According to Lightstone annual house price inflation is now effectively moving sideways."

Kotzé says there is admittedly still a risk that various extraneous factors could upset the proverbial applecart, sending the market lower once again.

"We are somewhat at the mercy of global as well as regional economic and other influences and there is still an oversupply of unsold property stock due to slack demand and repossessions. Consumer confidence is also still relatively low according to the latest reports.

"However, the world economy does seem to be coming steadily out of recession and although SA is lagging in this respect by about three to six months, we have managed to weather the general storm far better than most countries, so the dip in our property market has not been as severe as elsewhere."

He cautions, however, that as things start to look up, care needs to be taken to avoid an overreaction that sends property prices soaring once more in a short space of time, risking another painful downward adjustment and certainly attracting inflationary speculation and higher interest rates again.

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