House Prices Keep Falling

The information in this article is courtesy of Mail&Guardian (House prices continue to deteriorate – 4 May 2009).

House prices continued to fall during April. This finding by the FNB House Price Index is mainly due to a sizeable oversupply that had built-up in the residential market.

John Loos, property economist at FNB said that the index had reached double-digit year-on-year average house price deflation for the first time reaching -10,2%. This was last seen at the end of 2006.

The recent interest rate cuts, according to Loos, might not be enough to break the downward cycle, as the significant oversupply of property on the market will take some time to be mopped up.

The troubled global economy and its impact on South Africa’s economy is the key threat to the housing market according to Loos. He added that May is an important month for the local economy with some key political matters to be settled.

Loos concluded by saying that it is crucial for the new political leaders to send out the right signals as political matter plays a huge role in a thin residential market.