This would certainly result in a lot of pain to investors, developers and home owners in South Africa as the residential property market boom is past its prime. As per the data collected from big banks year on year housing capital gains which continued between 13.% (Absa) and 6% (Standard Bank) was far lower than the figure of 35% for 2004 and the previous year. As per the latest Absa’s index, real house prices have been rising at just 0.1% month on month and Standard Bank has said that nominal prices would stop rising by year end. This data suggests that slowdown in prices started before interest rates rose in June and August. Interest rates are further expected to rise by one percent before the year end. This would not only affect the homeowners but also property developers who had been too optimistic about demand or who got wrong products.



Who all would be affected the most? Houses, land owners, golf and gated estates on the coast and inland holiday homes which would be followed by poorly conceived and overbuilt urban developments. Investors who had been stretched by growing cost of debt would not be able to rely on rising property prices to save them and would be forced to sell their property in the already plummeting market.



The party is over folks so try and prepare for the crash which looks imminent.