Global Property Market Weakens

The information in this article is courtesy of Realestateweb (Global property market in tatters – 6 March 2009)

South Africa has not been hit as hard by die global economic meltdown as most other countries, but the property market has certainly seen better days.

The credit crunch has affected almost every property market in the world, including South Africa and Absa’s latest price index shows that prices as dipping fast. Absa puts the nominal year-on-year decrease of a middle segment house at about 1,3% for February, down to R950 800. FNB’s estimate is –7% and Standard Bank’s –2%.

Knight Frank House Price Index for the last quarter of 2008 ranks South Africa as number 17 out of 42 countries in terms of residential property returns. Dubai came in first, but analysts predict that this year will be a different story all together.

At the bottom of the list were Latvia, the United Kingdom, Iceland, the USA and Ireland.

Knight Frank said that these figures show that no country will escape unscathed by the global financial crisis. South Africa is particularly vulnerable at this stage.

“Despite higher gold prices, weaker mineral exports are causing its current-account deficit to swell, possibly to more than 10% of GDP (Gross Domestic Product) this year, at the same time as net foreign direct investment is expected to slump, so the country needs to borrow even more," said The Economist.

Nicholas Barnes, head of international residential research at Knight Frank said that predicting how much further market will fall in 2009 is virtually impossible.

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