The property market 5 years after the recession
The start of the recession in 2008 took its toll locally and globally on employment. In South Africa alone a total of 1 million jobs were lost as markets plummeted leaving half of the South African youth unemployed and ensuring the tightening up of money spending in all sectors.
This left the property market in dire straits as buyers declined immensely causing the property market to plunge into new depths after its highs in 2004/2005. However 2010 saw the markets slowly but surely recovering from its downward slide, but still remained a shadow of what it once was.
It is now 5 years later and the sale prospects have become more positive during 2011 and 2012. Stats show that the interest of buyers has grown rapidly which is mainly due to the many new online portals available for property investors. Even though the markets are a long way off from the peak it reached during 2004/2005 the buyer interest is at its highest it has ever been in the past 5 years.
Despite the interest of new buyers the amount of sales being concluded is still relatively low, this due to the banks strict lending criteria as well as the cost of credit. After the recession more people have become aware of the importance of limiting their credit, as pressure still remains on different working sectors. This does open an opportunity for buyers that do have access to credit or cash as there is still an oversupply of distressed properties on the market. This allows these would-be buyers to potentially buy properties lower than the prices seen 5 years ago. These buyers purchase properties at a very low cost in a market that is steadily inclining which could result in a very profitable long term investment.
The CEO of Engel & Völkers Southern Africa says that there has been a definite increase in would-be buyers since 2011 and that many of these do turn into sales. Craig also noted that the amount of sales has increased tremendously over the last 2 years with Engel & Völkers experiencing some of the highest figures since 2005. This is due to people having more job security now as they did back in 2011 and because of the many homes where the prices have dropped due to distressed sellers, opening the door for current buyers to investor to buy their dream home.
The markets have definitely changed since 2009 and the amount of activity experienced in the markets as well as new buyers coming in indicates that the property market is picking up and moving forward compared to what it was. Even though it may never enjoy the highs it reached almost 7 years ago, it will definitely increase and reach new levels that for many years have not been attained.