South African Property Prices up by Over 160pc in a DecadeAccording to research by Lloyds TSB International, property prices in South Africa have increased by 161% during the last 10 years, in spite of the market remaining quite unstable.
This means South Africa has seen the third highest price gains in the world, with only India and Russia seeing a faster rate of growth. Last year the average South African household income increased by 4.6%, but it's not all good news as unemployment reached 25% during the third quarter of last year, and house prices fell by 1.1% in 2011.
This situation isn't expected to improve during the short term, as the gap between house prices and incomes and rents needs to shrink considerably, and South Africa has an excess of new homes, many of which were built during the boom years before 2008.
Until this inventory is absorbed prices are unlikely to rise substantially. Mortgage rates are being predicted to increase by 200 points during the first half of this year, further dampening demand for residential property. At the moment interest rates are at their lowest level since the 1970s as they were cut substantially between 2008 and 2010.
ANC leader Jacob Zuma became the president of South Africa in 2009, and is well known for supporting wealth distribution even though he has assured foreign investors their interests will be protected.
Zuma has pledged to create 5 million jobs by 2020, but his target is looking somewhat unachievable. In spite of his pledge to protect foreign investor’s interests, he hasn't ruled out imposing restrictions on foreigners buying landed property, and in the future they may only be able to lease land.