According to The Economist: ‘Fluctuations in property prices can arise not only owing to cyclical movements in economic fundamentals, interest rates and the risk premium, but also as a result of the intrinsic characteristics of the property market itself.’
An illustration of some of the micro and macro economic factors that cause movement in a property market are:
MACRO
Supply will be influenced by:- Changes in law, Tax incentives
Demand will be influenced by:- GDP (growth in income), Tax (cost of ownership), Changes in law, Availability of finance
MICRO
Supply will be influenced by:- Building restrictions, Land prices, Business activity
Demand will be influenced by:- Population growth and immigration, Tourism, Development of infrastructure, Employment levels.
With particular reference to the property market, this helps clarify the benefit of hosting of the 2010 FIFA World Cup for South Africa; as a whole and for the hosting cities.
Tags: economic, Fifa, interest, market, prices, property, rate
May 9th, 2008 at 2:01 pm
Decline in property prices may be ‘overestimated’
The property market has always moved in cycles, moving from ‘booms’ to ‘recessions’. Sizwe Nxedlana, property economist for Standard Bank, says we are expected to go through a mild downturn in the cycle as opposed to a full blown recession.
“Property remains the one of the best investments and over time has shown very good returns.”
http://www.braycorp.co.za/news.asp?NewsID=48