House Price South Africa readers have had their say. Thank you to all who voted in the HPSA poll. Here are the results:
“Are house prices going to crash in South Africa?”
Highly likely: 31.58%
Not likely: 52.63%
Depends: 15.79%
Just over half of respondents said “Not likely”. Strikingly almost 32% of respondents voted “Highly likely”, while the remainder decided to sit on the fence with “Depends”.
This question was probably a little ambiguous because in nominal terms, it is indeed highly unlikely that house prices will crash. In fact if you have a look at the nominal house price chart here http://housepricesouthafrica.com/, you will see that nominal house prices have not “crashed” in South Africa since ABSA records began in 1966.
However, in real terms, a housing price crash is very much on the cards. It already happened between August 2007 and May 2009 where real house prices dropped a dizzying 16% in less than two years.
The question though is will prices drop further? At the moment they seem to be on a plateau, but could this be a false plateau with prices set to break through and drop further as the market comes under further stress?
Almost 32% of you believe they will.
Time will tell.
My stand in J-bay now sells for 50% less than what I bought it for in 2007 = crash!
My rental flat in Randburg now sells for 150% more than what I bought it for in 2007 = ???
I suppose it depends
It always depends. The key issue is, what is behind local variation, especially in a poor market? Rural coastal property is seeing a massive glut = crash has largely already happened. Over-priced high-end is going through a “Minsky moment” and an imminent crash – see Camps Bay/ Green Point, Sea Point. Some urban areas are in demand due to increasing local travel costs – so some might see prices rising. 150% since 2007, though, seems dubious. In general though, things are looking bleak for mid to high end property on many fronts. The only bright spot is that interest rates are going pretty much nowhere for quite a while due to poor economic outlook internationally, and strong rand.
People are rather naive. Property will collapse when Malema takes control and Nationalisation takes place combined with Land Grab. So these wonderful statistics mean nothing. The true position of South Africa will show itself and all the international investors who disagreed with Apartheid and who invested in SA will see what it’s like when the radical ANC take over, something the poor white minority tried to stop and the rest of the world just stood by.
i’m from england and going to be in cape town for a couple more years. i am lucky enough to have 2 houses in the uk which i now have paid the mortgage on, my point is in Manchester where i’m from you buy an apartment for the same (sometimes less) than in say Durbanville,Rondebosch, even awful areas like Obs and Woodstock have apartments for sale for 700-1million rand. it’s ridiculous. i was going to buy a 2 bed flat at auction here in Rondebosch that had a bank valution (dubious) of 1. 2 million rand and it sold for 640k, so almost half.but i have just made an offer for a biger place in Manchester for 60,000pounds , where the rental of 450-500 pounds per calender month,is pretty much guaranteed, with much less risk.I think it all comes down to affordability ,mainly for 1st time buyers, i personally think people can’t afford property now. Most expats i know are trying to sell up and reinvest in the UK, U.S.A ,places that they see higher growth and rental yields and a more transparent and safer investment as they think.