South African house prices are expected to slow down over the next few months from the current 5 percent growth rate.
According to Erwin Rode, chief executive officer of Rode & Associates, house prices are in real terms still too expensive relative to replacement costs, lack of employment growth, household indebtedness and the escalation of electricity tariffs.
He explains that the current turbulence in the financial markets is undermining confidence among business decision makers as well as consumers.
“Investors are starting to realise that we are not in a normal recession.”
Rode says residential properties are still overpriced and there are few niche markets remaining for developers.
The property market is moving slowly and prices are currently under pressure, but there is still activity, says Samuel Seeff, chairman of Seeff.
Seeff says the latest information out of the USA indicates that house prices continue to fall with recovery only expected in 2014.
The UK housing market continues to be a tale of falling house prices and low sales volumes with prices only expected to return to the previous peak in 2020 according to a recent PricewaterhouseCoopers (PWC) report.
“Our housing market is experiencing a period of price correction, especially in the mid-market and luxury sectors against the pre-2008 price boom levels,” says Seeff.
He says there is movement in the market, but this is lateral only as recovery continues to be affected by rising costs and credit remains a significant stumbling block for buyers.
Seeff notes that there has been an increase in first time buyers and definitely a buyers’ market right now. He says sellers need to price their properties accordingly or to hold onto to their properties until the tide turns.
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