Recovery not yet in sight
HOW LOW WILL house prices go before buying sentiment starts to improve? Though there’s no simple answer to that milliondollar question most industry players don’t expect the housing market to turn for the better before late 2009 or early 2010. Property economists, such as FNB’s John Loos and Absa’s Jacques du Toit, say this time around lower interest rates alone won’t be enough to kick-start housing activity.
Loos expects SA’s housing slump to get worse before it gets better. “The risks have shifted away from inflation and interest rates towards economic growth. Loos says it’s still uncertain how the global financial crisis will play itself out and whether there’s more bad news to come. That uncertainty will probably encourage SA’s banks to remain cautious about lending, placing continued pressure on housing demand and prices well into 2009.
Du Toit says in his latest monthly property overview that prospects for the residential property market for the remainder of 2008 and into 2009 appear “dismal”. He says SA’s housing market has cooled to levels last seen in the early Nineties, with Absa’s house price index now touching a 15-year low.
Standard Bank economist Johan Botha says even if interest rates start declining by second quarter 2009, the housing market