Property Market Emerging from Recession

January 13 - According to the latest statistics, December saw the second rise in house prices, indicating an increase of 2.7%.

The information was supplied by First National Bank's home loan strategist, John Loos.

However, Loos said that average prices in 2009 were still below 2008 levels by nearly 4%.

The rise in house prices indicates the South African economy's return to growth, according to FNB.

"The trend bodes well for a better 2010, after the market hit rock bottom in the first half of 2009," said Loos.

"The economy has started to emerge from recession, which should provide some mild additional support to residential property demand, and the full positive impact of last year's 5 percentage points' worth of interest rate cuts probably still needs to feed through into the market," he added.

Loos also commented on the potential effects that the World Cup will have on the South African property market.

According to him, the direct impact will be 'limited'.

"If the World Cup had taken place in South Africa back in 2006, when property was an extremely popular asset class world wide, perhaps one may have had a greater amount of impulsive buying by football visitors," he said.

Loos said that global recession has meant that property is not the popular asset class of several years ago.

"The 2009/2010 recovery is likely to continue to be overwhelmingly driven by locals looking for a place to live," he concluded.

1/13/2010 8:44:51 AM