South African Property Prices
Category News
If you are an expert, you might have noticed that SA house prices have become a lot cheaper lately – in fact about 30% cheaper!
Since the FIFA World Cup in 2010, South African property prices have become almost 30% cheaper in global terms.
This is because Rand house price growth has been sluggish over this period (particularly 2011-2012 where growth was negligible), while the value of the Rand has plummeted versus the pound.
While one would expect this to correct itself in the longer term through faster house price rises, it is worth keeping an eye on this trend as it is the most dramatic drop in prices in global terms in at least 25 years.
Further, it is not expected for this trend will reverse any time soon. Growth has slowed in SA over the last 3 years, which combined with rising inflation makes it less attractive as a global investment destination. On top of this, Moody’s has joined Fitch in downgrading South Africa’s investment grade credit rating to Baa2 from Baa1, just two notches away from junk status.
Actions needed to turn the trend around lie in the area of growth stimulating government policy – which casts a long shadow of risk over the chances of a quick recovery.
Now is the time to focus on optimising management of properties for maximum cash flow rather than focusing on capital growth.
Author: House Price South Africa