Global factors influencing housing market in South Africa

Interest rates have fallen by 6 percent over the past two years, the South African economy weathered the storm of the recession last year and the market is generally optimistic. Yet, the housing market is showing signs of stalling. According to the Reserve Bank's Monetary Policy Review, house price indices returned to positive territory for three major banks (ABSA, FNB and Standard Bank) after the recession, but fell sharply for two out of the three banks during the period June - September.

The FNB index dropped from 11.6 percent to 4.5 percent and in the Absa index from 10.4 percent to 2.9 percent in terms of year-on-year growth, while Standard Bank's median house price index grew from 3.6 to 8.3 percent.

According to Standard Bank economist, Johan Botha, "the acceleration was due to the very low base in September last year when the median house price contracted by more than 5 percent".

Absa property analyst Jacques du Toit said on Friday: "The recovery in the housing market globally and locally will take longer than in some previous cycles as a result of the extent of the impact of the recession." He went on to speak of, "widespread economic uncertainty especially in the industrialised countries" as a result of the "higher level of indebtedness of the global and local consumer".

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