Worst Property Market in 12 Years

The South African residential property market has reached a 12 year low. This comes after Standard Bank released it median house price index on Tuesday 20 January 2009.

According to the index there has been a 3.1% decrease year-on-year in December, which brings the average annual decline in 2008 to 0,3%. This, according to Standard Bank is a result of economic growth virtually came to a standstill in the third quarter of last year, meaning consumers came under a lot of stress, which in all led to the worst property market in 12 years.

This was worsened by the international economic environment experiencing its worst recession in 80 years.

Last year we saw high oil prices threatening to result in runaway inflation and commodity prices collapsing towards the end of the year. The combination of sharply declining commodity prices and weak demand resulted in inflation falling rapidly in many countries around the world.

According to Standard Bank job layoffs were on the increase as businesses found it difficult to cope with the tough economic conditions, which led to further stain on the property market.

"Clearly, the combination of slow growth, relatively high interest rates, punitive debt levels and still high inflation, in a general environment of plunging confidence, will impact negatively on many segments of the economy, including the residential property market," the bank noted.

On the bright side, Standard Bank stated that they expect interest rate cuts of up to 250 basis points during 2009.

The information in this article is courtesy of Mail&Guardian (SA House Market at 12 Year Low – 20 January 2009)

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