Global house markets are said to be showing tentative signs of its recovery. The markets contain private property sales as well as bank repossessed houses. The house prices are starting to stabilize throughout the globe, as well as in SA. Repossessed houses will not be getting any cheaper form here on out. According to the second quarter 2009 Knight Frank Global House Price Index released recently, house values in countries surveyed are improving. This includes private property as well as repossessed houses. Although house markets remain “fragile and patchy” all over the world, the prices are starting to bottom out, Liam Bailey, residential researcher at Knight Frank, said.
Further fall in prices are always a possibility with the credit flow that remains limited and the global economy that struggles to recover from the recession, but we have already witnessed the worst, said Bailey.
On the Global house index, South Africa is ranked number 19, showing an annual house price change of negative 4.1% in the second quarter. Israel, who is ranked number 1, shows an annual house price change of positive 12.5% and is the only country to achieve double figures growth in the 12 months to the end of June.
The Index suggested in the first quarter that South Africa was overflowed with an oversupply of houses in the market which in turn weakened the house prices. South Africa has fallen in the performance charts from the first quarter.
High expectations hang over the house market in 2010. Many are expecting a turnaround of houses prices and market activity. John Loos, property strategist at FNB Home Loans, in contrast said that he does not expect a “drastic” improvement in property values for 2010. He expects the house prices to grow in real terms. He said that consumers are still over-indebted and not in the ideal situations.
The FNB house price index also indicated an ease in the decline of house prices. Absa expects a continual year-on-year house price deflation for the remainder of 2009 and early 2010, after which price growth is forecasted.
With the relaxed lending criteria from the different banks, the house market demand is set to pick up. This will have its positive effects on the house price index, but negative effects on the consumer’s pocket when buying private housing or bank repossessed houses. Repossessed houses will remain the better, cheaper option for still another period or time to come, but as the market picks up, bargains on repossessed houses won’t be as cheap as they use to.