There are now increasing numbers of people going to show houses and more buyers are finding the confidence to sign an offer to purchase homes. This could very well be a sign that the worst of the property \’crash\’ is finally behind the South African property market and that growth in the residential property sector is a possibility.
For the most part, South African estate agents and franchises are generally optimistic that the current status of the real estate market is starting to change for the better.
When the recent declines of the South African property market are taken into account, there are now indications of a more positive swing in sales trends. South Africa seems to be transforming for the better since the property market slump.
There are numerous contributing factors that are responsible for the revival of the South African property market. Primarily, it appears that the interest rate cycle has peaked, with rates now potentially holding steady and even decreasing towards the second quarter of 2009.
The fact that the cost of oil has decreased significantly has also boosted consumer confidence, which previously had been severely shaken by the volume and extent of the petrol price hikes in 2008.
Adding to this, the news that a long-awaited negotiated political settlement in Zimbabwe is on the horizon has created a sense of optimism. The spree of xenophobic violence experienced in South Africa in May last year, has for the most part been resolved. Also, the electricity supply appears to have stabilised which has created great optimism.
One must also take into consideration that the severe winter weather experienced in the Western Cape during 2008 had a negative effect on the property market. Pleasant and warm spring and summer months seem to have a positive affect on the property market.
The 2010 FIFA World Cup is also just over a year away from kicking off – and this is yet another factor in favour of the South African economy and property market.
Potential buyers should make their property purchases now as the chances of property prices declining any further in the future are highly unlikely. Prices will begin to rise again sooner rather than later as indicated by previous trends in the market.
However, by the same token, individuals selling their property should be realistic with regard to their asking prices and refrain from overestimating returns.
A number of property experts predict that the expected increase in income per household, which is pivotal to the strength of the residential property and mortgage market, could undo the misfortunes of the ailing residential mortgage market. This means that after sharp year-on-year declines since mid-2007, the value of new mortgage loans could return to positive year-on-year growth, towards the second half of 2009.
These points are indicative of a revival in the South African property market.
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