South Africa’s home prices decline

THERE has been little to celebrate for the South Africa’s homeowners for a decade. From 2008 to 2018, real house prices in South Africa — i.e., after inflation — dropped by about 4.8 per cent.

During the year to the first quarter (Q1) 2019, while South Africa’s nominal house prices rose by 3.96 per cent according to ABSA, when adjusted for inflation house prices again declined — by 0.51 per cent.

This reflects pressure on household incomes and a depressed macroeconomic environment, according to First National Bank’s analyst Siphamandla Mkhwanazi.

“We expect house prices to remain confined within the 3.5 per cent to 4.5 per cent range for an extended period,” said Mkhwanazi — well below the central bank’s annual inflation forecast of 4.7 per cent this year, and 5.4 per cent in 2020.

In Q1 2019, South Africa’s economy contracted by

3.2 per cent, the biggest quarterly falls since Q1 2009, according to the Statistics South Africa.

The South African Reserve Bank (SARB), the country’s central bank, has slashed its 2019 growth projection to 1 per cent, from its earlier estimate of 1.3 per cent.

In 2018, the economy grew by a minuscule 0.8 per cent, following a 1.3 per cent expansion in 2017.

South Africa is Africa’s second biggest economy, with an estimated population of 57.7 million and an estimated GDP per capita of $US 6,377 ($F13, 606) in 2018.

It has formidable manufacturing and financial sectors. It is the world’s largest exporter of gold and platinum. Tourism is also a key source of foreign exchange.