Market indicators have a direct impact on the property market and are helpful devices in gauging activity and measuring potential, however, the current house pricing data coming out of South African banks, mortgage originators and estate agents is frequently confusing and contradictory.
The capricious nature of the South African property market can be largely attributed to the global economic recession, which has led the sector down a bumpy and erratic path. Recently, a number of trends have emerged in the sector including a changing buyer demographic, a slowing decline in sales and a return of year on year house price inflations.
Homeowners and real estate professionals alike have been watching local and international real estate housing markets carefully, particularly indicators of market health and what’s to come.
The current ambiguity permeating the sector is leaving many uncertain as to exactly where the South African market stands. If you’re wondering whether we’re at the bottom of the real estate crash and whether the recovery has started or not, you’re certainly not alone.
Utilising informal market indicators to assess the current state of the property market has proven to be an expedient and reliable tool in understanding market fluctuation. A few pertinent areas to watch in the current real estate market include amongst others, new properties on the market, new developments, home sales and distress in the housing industry.
The number of new properties currently under sole mandate and those being placed on the market is a more current indicator of housing market strength than actual sales, although slightly less accurate. I encourages individuals to compare today’s number to the number a year ago for a good sense of how their local market is trending.
The number of new development projects launched is another handy indicator of the direction in which the market is moving. Larger developers spend a lot of money on market research before investing the millions of Rands which new construction projects cost, so take advantage of their investment by using them as a gauge of the market.
Home sales and monitoring property being transferred, is the best indicator to track, as they offer insight into true market demand. I encourages individuals to compare last month’s figures for these two indicators to that of a year ago, for a strong indicator of how the market’s moving.
While home sales offer the best glimpse into market demand, the distressed housing inventory available in your market demonstrates the market over supply. I recommends that individuals track this number over time, to see the rise and fall in distressed real estate supply in their area as an indicator of the market.
Whether you’re a real estate investor or home owner, a landlord or tenant, it’s worth keeping your finger on the pulse of your local real estate market. Now is a great time to buy real estate, so do your homework, and determine whether you’re ready to become a home owner, landlord, or investor.