South Africa falls off global property 'top 10'

South Africa was no longer one of the world’s top 10 performing housing markets according to a UK-based property group.

Knight Frank said that according to the latest global house price index, South Africa has moved down to 19th position in the second quarter of 2008. A year earlier it was 7th on the list.

The index shows the southern African nation’s house price growth slipping from 15.5 percent to 3.8 percent over the one year period.

Nick Barnes, the head of international research at Knight Frank, believes the reserve bank’s five basis point hike had “severely” knocked the affordability of the South African housing market.

The bank has raised its prime lending rate by 500 basis points to 15.5 percent since June 2006, when the tightening cycle started. Market commentators are confident the tightening cycle has ended, foreseeing rate cuts as early as next year.

Three years ago South Africa boasted the world’s fastest growing housing market according to Knight Frank, appreciating at a whopping 30 percent annually.
Barnes believes, “South African consumers are highly indebted and it seems likely that prices will fall in the near future.”

Many local property analysts are still bullish that the property market will make a recovery soon, and that any fall-off in prices will be short-lived.

South Africa is not the only country where housing prices have cooled significantly. The United Kingdom’s property market slumped from 14th position to 37th place over the same period, with prices on average down -3.9 percent during the second quarter 2008.

In terms of performance, the United States is near the bottom of the pile, recording an average price fall of -16.8 percent.