FNB Releases Their Property Outlook for 2012

In their latest report released on 9th January 2012, FNB gave their overview of 2011, and predictions for 2012.

In a very similar vein to the report released by ABSA in December, FNB confirmed that house price growth in 2011 slowed to about 3% in nominal terms.  When taking inflation into account at an official rate of 5%, this translates into a depreciation of 3% in Real Terms.

In other words, if you owned a property that was valued at R 1 000 000 a year ago, it would be worth R 1 030 000 today.  However, if you take inflation into account, you would need
R 1 050 000 to purchase what would have cost you R 1 000 000 a year ago – so you would have decreased your asset base by 2%, or R 20 000.

What will happen in 2012?  FNB says that the European Credit Crisis, as well as huge levels of debt in the USA – the worlds’ largest economy – mean that global economic recovery will continue to be slow in 2012.

Given these facts, and the reality that a solution to the global economic woes is not yet in sight, FNB comments that it will be a few years before the property market begins to flourish.

So, if you are a property Seller the message from the top economists is that property prices will not outpace inflation for the next few years.  Don’t hold your breath – unfortunately global economic forces mean that your property value will not increase to the point that it makes any sense to hold out for a market improvement.

If you need to sell, then it makes sense to sell today.  Price your property correctly and ensure it is aggressively marketed by a professional real estate company.  That’s the only way to ensure that your property stands out in the crowd from the hundreds of other listings – and, if correctly priced – it will sell.

The longer you take to sell, the less you will achieve in real terms.

But the good news is that property prices are not declining as they did in 2009 when they declined by almost 10%.

We need to continue to tighten the belt and remain realistic.  Our economic survival will depend on our individual determination to save where we can and to spend wisely.  There are numerous excellent buying opportunities – but sellers need to appreciate that there is no evidence of a quick recovery to the property market.

Source: FNB Property Barometer 9 January 2012

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