Property Predictions for 2009 - 01-08-09

January 8 - With the FNB predicting that home prices in South Africa will continue to fall in 2009, things are already looking bleak for property owners hoping to sell.

Global Property Guide, which presents research after a thorough investigation of the property market in dozens of countries around the world, said that the South African market will not remain immune to outside influences, as has been proven recently by the further slump in the market following the US economic crash.

A senior economist for Global Property Guide, Prince Christian R. Cruz, noted that there are three main factors which might turn the current slump into a full on crash in South Africa.

First, he noted that the election of Jacob Zuma to presidency may have a detrimental effect on the property market. "It is unclear if Zuma's populist rhetoric will translate into actual policies," said Cruz. However, he noted that if they do, they could, in his opinion, undo any of the gains made by Thabo Mbeki in his role as president.

Another element that may affect the property market is the continued unrest in Zimbabwe. Cruz warns that should the political unrest and health problems facing the country spill over the borders into South Africa, this could do damage to the property industry. "The sooner the new government intervenes and moves to contain the damage done by Mugabe, the better," said Cruz. "Past attacks on immigrants and the increasing number of refugees across the border highlights how volatile the situation is."

Cruz also said that a sharp drop in commodity prices may also drag the economy into recession, thus affecting the property market.

However, Cruz said that if the economic situation in South Africa remained the same, he did not expect huge drops in property prices, showing that there was still light at the of the tunnel.