Global Recession Impacts South African Property Market - 11-25-08

November 25 - While the South African property market has been undergoing some tough times in the past year, experts were quick to say that these effects were short term and a result of the National Credit Act. The general consensus was that things would take time to stabilize but by the middle of next year, things would definitely start looking up.

However, just as the property market started showing buds of recovery, along came one of the worst global recessions in history and put pay to any hope that there is a light at the end of the tunnel.

With the current goings on in the world financial market, any hope that the South African property market could improve its lot has been delayed for a long time to come.

Some of South Africa's main industries, such as mining and manufacturing will be badly hit by the global recession, leading to serious jolts in companies and sectors dealing in these trades. Jobs may be lost, companies may collapse and profits may dwindle, causing banks - already jittery about lending money to their consumers - to decline home loan applications at an even higher rate of 50%.

As the government starts to count its pennies, authorities may put on hold any projects in the pipeline, including housing. While the obvious short term effects of lack of housing for the low income groups are fairly obvious, the long term effects should also be considered.

If the government does not invest in mass projects, industries such as construction and engineering will begin to suffer. The reduction in demand for these services will ultimately lead to the loss of jobs, and a stunt in income growth. House prices may increase, and the general population will simply not be able to afford average houses on the market.

If these trends continue for too long, South Africa may soon find itself in deep recession, and the property market may take longer than ever to drag itself out from where it finds itself at the moment.