Prices to rise by 60% in next 5 yrs

South African houses prices will be 60% more expensive in the next five years, a senior official at banking group Absa said on Tuesday.

"In five years' time property is expected to be about 60% more expensive than today, taking into account annual growth of 10% over this period," said Gavin Opperman, managing executive of Absa Home Loans.

As with other industry players, he noted that prices would hit the bottom this year, with price growth projected in single digits.

"This year will most probably be the year to buy property, also as an investment," he said.

John Loos, a property strategist at FNB, expects prices to slow to 8,1% this year from 13.9% last year before picking up slightly to 10,6% in 2009 and 18,9% in 2010. – I-Net Bridge

Readers' Comments
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I think it is high time that someone muzzles John Loos.

I notice that, thankfully, Jacques du Toit is mentioned less often. These "experts" have caused untold harm to gullible youngsters (and many older people too) by predicting growth that they interpret as a license to buy at any price.

I am a valuer that is now engaged in doing legal valuations for defaulting borrowers that paid too much in the frenzy of the last two years, and now find themselves unable to pay the mortgage, unable to sell at a break-even point, etc.

For John Loos to predict anything about the economy to the point of a decimal of a percentage is downright silly; even a range within limits of 10% either way is speculative.

And furthermore, for any bank to estimate average house prices near a million, is folly. For one, they are using data based on their own home-loan book. Second, they do not take the definite segments into account, and third, such a high average on their loan book does indicate the possibility of red-lining (against the law I think) - because the majority of sales over the past two years has been to emerging buyers, first time homeowners, etc, who have been buying sub-R500k.

A look at the Property24 sales records (as provided by the deeds office) will show who the lenders are that provide loans in the townships – the majority in our area are funded by Nedbank and Standard Bank, which shows that they are taking empowerment seriously, with a fair approach to risk. And one does not see their economists pounding the media track. They appear to be doing it, rather than talk about it. – Andre Crouse

Please explain further how house prices will rise by 60% in the next five years, considering what has been happening with the interest rates and the energy problems that we are facing (for at least the next five years). If our economic growth is predicted to decline, how does one justify the said 10% growth in the article? – Motau Kgomotso

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