Housing price data reveal that the 19th FIFA World Cup soccer match held in South Africa in 2010 helped raise prices, but are now falling as the football fever cools. The nation’s economy grew 2.8% in 2010 and is expected to show a gain this year, and the Reserve Bank has slashed interest rates 12 times since 2008, but it is failing to encourage sales or price increases. Prices have fallen 4.65% in the second quarter when adjusted for inflation and there are no gains expected throughout 2012, according to one South African financial services company. For more on this continue reading the following article from Global Property Guide.
The average price of medium-sized houses rose slightly by 0.72% during Q2 (but fell -0.65% in real terms) to ZAR973,400 (US$141,553), according to ABSA, one of South Africa’s largest financial services companies.
ABSA forecasts that house prices will rise slightly in 2011 and 2012, but the small rise in fact means a fall when adjusted for inflation (see latest ABSA Housing Review (Q3 2011)).
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“The (property) market is moving slowly and prices are under pressure, but there is still activity,” said Samuel Seeff of Seeff Property Services.
South Africa enjoyed astonishing house price increases during the years 2000 to 2007 (with house price rises of 253.7%). The boom ended in Q1 2008, after the global financial crisis. But house prices were quick to recover as the Reserve Bank cut interest rates twelve times beginning in December 2008, to 6% in September 2009. By early 2010 house prices were surging again, encouraged by South Africa hosting the World Cup. Property price growth has since slowed, together with the waning of football fever.
From January to May 2011, new housing approvals were up 1.7% on the same period last year, to 19,603 units. But building completions fell 0.8%.
The South African economy grew by a modest 2.8% 2010, after experiencing a 1.7% contraction in 2009. The economy is projected to grow by around 3.5% in 2011. However, the old problem of high unemployment continues to pose a challenge. The unemployment rate was 24.8% in 2010, from 24.3% in 2009 and 21.9% in 2008.
Foreigners can own immovable property in South Africa without restriction. However, all foreign funds remitted to the country must be declared and documented to ensure repatriation. The property must also be endorsed ‘non-resident’, as a condition for repatriation.