During one of my presentations to a bank, someone asked me how fuel prices could affect the housing recovery; in fact one of the attendees asked me if I really believe there is a housing recovery right now.
That’s a very good question.
Last week a new survey in the USA from MacroMarkets, revealed that of 111 housing-market experts and economists surveyed, nearly half foresee a double-dip in home prices happening this year, “and not a single expert expects US national home prices to recover to the pre-bubble trend in the coming five years.” In December, only 15% projected a new post-crash low would materialize for home prices. We are now less than 1% away from that mark, according to the survey.
Overall, the sentiment among American experts regarding the U.S. housing market outlook continues to deteriorate. Now they are expecting only a weak recovery, and even that is not until 2013.
Our feeling is that South Africa may not be that dissimilar and uncertainty in Japan and trouble in Libya will directly affect the housing recovery.
We expect home sales to remain soft in the short term, given uninspiring leading indicators. If consumer sentiment remains poor and home buyers are fearful, this will stunt the recovery.
House buyers are looking at the weakness in the economy, are concerned by interest rate increases and they’re asking; is this a good time to borrow R1million on a house?
You might think fuel and transportation prices are a lame excuse for another dip in housing, but they’re not. In the South African property market, historically, families are looking to move out and up to a larger home. Those homes are usually further from city centres. Transportation costs are most definitely a factor, especially for low to middle income buyers, who happen to make up the bulk of the current South African buying market.
It looks like existing home sales in the first quarter of the year are dropping and sales of new constructions is very weak. I think that 2011 has started on a fizzle and that recovery is still coming.