Sober news for SA property

Johannesburg - Key property indicators delivered sobering news for property watchers as the best South Africans could hope for was market stabilisation rather than a fully-fledged recovery.

This was after FNB and Standard Bank published their monthly property updates on Monday. The FNB House Price Index declined by 9.5% this month, compared to the 9.7% decline in June.

In comparison, the Standard Bank Residential Property Report (also a measure of house price inflation) recorded a 4.9% decline in house prices, the same as in June.

"The best that we can hope for is for price declines to stabilise towards the end of the year as the recent interest rate cuts work their way through the economy and overall sentiment improves," said Standard Bank.

According to John Loos, a property analyst at FNB, house price inflation was falling at a slower pace as global economic data and a slight uptick in local demand signalled a bottoming out of the economic crisis. "It might be a bottoming out, but we?ll bump along the bottom for quite a while," said Loos.

The slight drop in decline in the FNB's index indicated "...stability, rather than rapid, decent growth" can be expected for the next couple of years, Loos said.

Meanwhile, US data showed an increase of 11% in new home sales for June and sales of previously occupied homes rose for the third month in a row, a psychological achievement which saw optimism pervading the markets - the Dow Jones industrial average rose to above 9 000 last week for the first time since January.

The oil price topped $70 for the third straight week as commodities have seen a spurt of interest with countries like China seen stockpiling.

"The [South African] economy is not insulated and we're not expecting fireworks from the world economy for a few years," said Loos.

- Fin24.com