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2008 has been heralded as a buyer’s market, the return of the Year of Good Bargains. To quote the great oil magnet John Paul Getty, “I buy when other people are selling”, this quote is possibly one of the simplest yet profound quotes that is perfectly applicable to where South Africa sits presently…
Current economic factors have created the scenario where the supply of property is greater than the demand this meaning that you are likely to find yourself in a position to drive really good bargains on properties in South Africa.
With all the global turmoil being felt, the South African market is set to recover early next year, this being the market reaching its utmost lowest point with nowhere but upwards to move. The 2010 Soccer World Cup is set generate R70 billion in tourism revenue, create over 415 000 new jobs, but what many don’t take into account is the interest that it will generate. With billions of viewers glued to the screen, our proud and beautiful land will be showcased in its glorious appeal.
South Africa is an upper middle-income country with the characteristics of both a developed and developing nation. Based on purchasing power parity, South Africa's Gross Domestic Product of $663 billion ranks it as the world's 20th biggest economy and contributes 38% of Sub-Saharan Africa's GDP. Cape Town and Johannesburg were ranked 33rd and 11th respectively on the Master Card emerging nation’s index. South Africa's largest saving grace was that of the New National Credit Act (NCA), instituted in June of 2007 has become a hit with policymakers around the globe as the international credit crisis tilts the world economy towards the worst recession since the 1930s. A number of African and European countries are studying the Act with the aim of hardening their own credit legislation and reining in reckless lending. Many experts are warning investors to steer clear of the property market. This is completely the wrong move to make! There’s no housing recession. Housing prices are simply normalizing as a result of the unnatural growth we have experienced over the past 5 years, something that was bound to occur at some stage. National property sales have slowed, this in reaction to the inception of the NCA and the global credit crisis with the direct result being a 38% year-on-year decrease in the amount of national property sales transactions between January to July 2008, compared to the same period 2007.
Of the total national transactions conducted by buyers and property investors between January and July of this year, the highest frequency of buying activity of 43% recorded, was in the price bracket of R499 999 or less. This mainly due to the large scale investment properties being purchased, it is best summed up in a quote by Warren Buffet “be fearful when others are greedy and to be greedy only when others are fearful”, these simple words are profound and thoufht invoking.
With signals of market recovery on the way, the effect of possible decreasing interest rates, slowing consumer inflation as well as the stricter lending criteria from all major financial institutions has highlighted that the one single key buying motive for consumers will remain affordability, and the ability to sustain their debt exposure, which with all of the procedures and acts that have been instituted will help pave the way to financial success in South Africa.
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