Johannesburg - In the first quarter of this year the South African housing market slipped to 30th place on the world house price index, after occupying 29th position in the last quarter of 2010.
In the first quarter of 2011 South African house prices were 1.3% down on the corresponding quarter last year, as indicated by the latest Frank Knight Global House Price Index.
South African property analysts are not optimistic about the future of house prices this year, specifically against the likelihood of interest rates rising later this year.
First National Bank property analyst Ewald Kellerman expects house-price growth to languish for some time yet, and even fall for a couple of months if interest rates rise.
Jacques du Toit, senior property analyst at Absa’s Home Loan division, expects house price growth of around 1% for the year as a whole. He said the consumer’s appetite to take on further debt is currently low and related to his indebtedness.Liam Bailey
, head of residential research at Knight Frank, said that in the first quarter of this year global house-price growth had contracted to 1.8% year on year from growth of 3.3% in the fourth quarter of last year.
He said this pointed to underlying problems in global housing markets. House prices in 25 of the countries included in the index of 50 countries had remained unchanged or had declined in the first three months, compared with 18 countries a year ago.
The three countries in which the fastest house-price growth was measured in the first quarter are Hong Kong, with growth of 24.2% year on year, followed by India with 21.9% and Taiwan with 14.3%.
Bailey said that, although many experts saw the US as representing the greatest risk for the stability of global housing markets, Knight Frank believed that Asia held significant risk.
He said that housing markets in Hong Kong, China and Taiwan had the potential to become overheated if there was inadequate government intervention.
He said that the efforts by some Asian governments to let house prices cool down had been fairly successful, but in Hong Kong the housing market had taken off again. The most important driver in this market was demand from China, which represented almost one in every four purchases.
Bailey expects the current downturn in global housing markets to persist and reach a trough in the fourth quarter of this year, after which a slow recovery could begin in 2012.
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