Jacques du Toit, Senior Economist

Name: Jacques du Toit
Position: Senior Economist (Property)
Organisation: ABSA

Before the recent global financial crisis, economists predicted interest rates would come down next year. Do you believe this could still be the case?  

Inflation (CPIX) is believed to have peaked and is expected to trend downwards into 2010, while the economy is set to slow down towards the end of 2008 and in 2009. As a result interest rates are expected to be cut by 200 basis points during the course of the second half of next year. 

When do you foresee the decline in residential property prices bottoming out? 

According to our calculations prices are virtually stagnant in nominal terms, but have already declined by about 6% year-on-year in real terms (i.e. after adjustment for inflation) in the first nine months of the year. The expectation is for the property market to bottom around mid-2009 and start a gradual recovery in the second half of the year.   

Is the number of property transactions being completed starting to increase? 

The number of property transactions concluded has slowed down significantly in recent times, with no indication of a recovery at this point in time.

If the current global turmoil continues well into next year, what kind of affect could this have on the SA property market? 

Firstly, the South African economy will be negatively affected by a slowdown in global growth, impacting demand for, and value of, our exports, driven by a low world-demand as well as low commodity prices. This will work through to lower levels of domestic economic activity, impacting negatively for example on manufacturing production and levels of employment and household income.

In view of these developments, the property market will be adversely affected as the household sector will remain under financial pressure. 

What is your view of the SA residential property market over the next 12 to 18 months? 

The market is expected to continue to experience difficult conditions for most of the next 12 months, with gradual recovery in levels of activity and price growth towards the end of 2009. It will only be in 2010 that the market is expected to record a noticeable recovery.

Visit TradeInvestSA every Friday for a new interview with one of South Africa’s leading business personalities.