On 16 February this year I predicted (in my blog), an 80% drop in SA property values, from peak to trough... and some people thought I was crazy.
Well, from the peak in August 2007, property values have already fallen over 30% and we still have a looooong way to go...
During this same period, property prices have already dropped 85% in the UK, 76% in Australia, and 70% in North America, so I guess South Africa is not doing too bad, but we have not reached the bottom yet.
How far will we go? I still stand by my original forecast.
Is this a bad thing?
For homeowners who can continue to live in their own homes for another 10 years or more, the actual value of the property is irrelevant if they do not need to sell (unless they wish to re-finance, but no-one would be foolish enough to do that now).
Those with homes that are actually saleable in this market, can use this opportunity to "upgrade" to a fancier home for minimal expense if they shop around and negotiate a good deal. Even if they sell their home for 25% below current market value, they might be able to pickup a nice deal at 45% below current market value, which are not difficult at all to find today. (I am buying at 50% BMV or better).
For investors with cash or credit, now is the time to start shopping for bargains.
Rental yields are good and when the market turns, the growing demand will escalate these bargain purchases rapidly, for good capital gains.
Its a mad trolley dash for property bargains!
The table above is compliments of FinancialMail.co.za
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