Page 26 - Blue Valley News 2 2021

PROPERTY

Lightstone, a leading
provider of comprehensive
data, analytics and systems
in the property industry,
suggests scenarios that
could see house prices rise
by between 2.1% and 5.2%
in 2021.

HOUSE PRICE SCENARIOS DEFY

COVID-19 ADVERSITY

esidential property prices defied South Africa and the impact of the economic at the financial crisis of 2008 where we also
COVID-19 conventional wisdom in lockdown was assessed. Economic forecasts experienced a sudden drop in GDP growth.
R2020, and house price inflation ended were hurriedly adjusted downwards and At the lowest point of the 2008 recession,
close to 3% at the end of the year, some 2.7% even the most optimistic economists were the South African economy shrunk by -1.5%
above Lightstone’s forecast made at the predicting an economic decline of around while house prices shrunk by -5.4%. Using a
beginning of 2020 and 6% above the highest 10%. “As it happened, this was not far from simple rule of thumb, it seems safe to predict
post COVID-19 prediction. Lightstone the -7.3% expected for 2020, however house that if the economy was to decline by 10% in
anticipates residential sales will continue to prices did not follow economic growth as 2020, house prices would drop by the same
hold their own, and house price inflation is expected,” says de Kock. percentage or more.”
anticipated to be anything between 2.1%
and 4%, with a potential upside in the luxury SO WHY DID HOUSE PRICES TAKE A
sector. DIFFERENT PATH?
Lightstone, along with other economic
Before COVID-19 struck, Lightstone commentators, did not anticipate the “2020 has thrown
forecasted that annual house growth was resilience of the house price market, some interesting
going to drop from 1.4% at the end of 2019 with even the most optimistic scenarios
to about 0.3% at the end of 2020. “We took forecasting negative house price growth. curve balls our way
this view because of low economic growth as unprecedented
forecasts of about 1% for 2020 and the Predicting house prices during normal times circumstances have
generally weak housing market conditions can be tricky, but predictions amid a once in kept us analysts on
that were expected to continue from 2019 a lifetime catastrophic event became near
into 2020,” says Paul-Roux de Kock, Analytics impossible. During the last couple of years, our toes. In saying this
Director for Lightstone. the economic environment in South Africa however, it has been
did not change that much from one year to interesting to see
As news of the economic impact of the the next, and typically house prices followed
coronavirus outbreak filtered through that same trend. A ‘Black Swan event’, how a year marred
international media towards the end of which lead to the largest annual decline in with such negative
2019, its true impact was only really felt in economic growth since the Reserve Bank sentiments can open
Europe in the first quarter of 2020, and in started recording statistics, makes looking new doors for the
South Africa in the second quarter. ahead even more difficult. housing market,”
Apprehension turned to panic in many De Kock says, “To try and make sense of the - concludes de Kock.
quarters as COVID-19 worked its way into impact of the economic lockdown, we looked
24 • Issue 2 2021 • BLUE VALLEY NEWS