Troubling times for property owners and mortgage payers with the latest property news from FNB and ABSA confirming the gloomy sentiment gripping the property market. According to the FNB Houseprice Index  , house prices are at their  December 2006 level effectively wiping out over two years of property growth. ABSA maintains that this is the worst property slump in 23 years.

According to the FNB report home prices have fallen 10% year on year for the period ending April 2009. The average house price will cost you about R675 000 after reaching a peak of R758 000 in February 2008

This is hardly news to consumers and property owners and even interest rate cuts of 350 basis points since December have not really helped the depressed housing market , although you need to factor in the fact that rate movements have a lag effect of approximately 12 months.

The biggest single factor driving property prices down is the current global recession coupled with certain local political risk factors.  Once President Zuma is inaugarated and his cabinet has been announced(especially the position of Finance Minister) political uncertainty should reduce significantly. Other factors are the over supply eveident in the property market - just drive around your suburb or town and take note of all the For Sale signs.

Most commentators agree that the current global recession should last until next year with only the most upbeat experts predicting positive news by late 2009.This means that we can expect to see the property market improving during the latter half of 2010 with the major concern being jobs and unemployment as well as shrinking disposable income.

What should property owners and prospective buyers do in the current situation:

• Don’t sell unless you absolutely need to , especially if you purchased your property during the last two years. If you bought prior to 2006 you will still experience reasonable capital appreciation on your property , obviously depending on when you bought.
• If you are in the market to buy and you don’t need to sell a property then this is an excellent oppurtunity and you should BUY! Don’t wait for the bottom of the cycle you may well miss the boat and kick yourself for years to come.
• If you are in dire financial straights and can’t afford your monthly mortgage payments , don’t become a panic seller. Talk to your bank about restructuring your current mortgage payments, your bank in not interested in foreclosing and selling your property in a depressed property market.

You can read the full FNB Report