Sa: ‘coming of age’ or ‘decelerating’?

South Africa's house price inflation has plunged to an 8 year low…

According to Knight Frank’s recently released Global House Price Index, South Africa saw house price inflation of 8.8% over the 12 months - a noticeable slowdown from the same period a year earlier which produced growth of 13.6%.

Liam Bailey, Head of Residential Research at Knight Frank, observed:”The last 12 months have recorded the lowest growth in prices since Q1 2000. The slowdown in price inflation has accelerated since Q3 2007, driven by rising interest rates, a slowdown in wage inflation, and the completion of financial lending reforms started in Q2 2007.

“CPI inflation is forecast to remain relatively high, as a result of rising oil and food prices. Despite this, interest rates are unlikely to edge higher in the short to medium term.

SA ‘the next big thing’

Despite the apparent doom and gloom, one expert had nothing but positive things to say: “South Africa is coming of age”, noted Lloyd Cornwall, Director of Pin High Property.  He added: “The last 10 years have played a major part in shaping its future and now South Africa is in a strong position to become a major player in the international arena. South Africa is the ‘next big thing’ in terms of investment.

"With huge natural resources an ever growing economy and stock markets performing well, it is becoming more attractive to investors each day. The property market has been one of the biggest performers and despite these huge growths over the last decade, South Africa is still vastly under priced, therefore over the next decade we expect to see these prices come into line with the European markets, which means healthy profits for all who have invested into the property market.”