house prices in South Africa are growing the fastest in the world

Johannesburg - In the competitive global residential property market, house prices in South Africa are growing the fastest in the world.
An increase of more than 30% in residential property prices over the past year has ensured South Africa hit top spot on the authoritative house price index of The Economist.

With growth of 35.1% on a year basis between the third quarter last year and the third quarter this year, the country surpassed Hong Kong where property prices grew by 31.2% over the corresponding period.

Third on the list was Spain with growth of 17.2%, followed by New Zealand with 16.4%.
The Economist described the global residential boom as exceptional. Never before have so many countries experienced growth in their residential property markets at the same time.

This trend is largely driven by low interest rates.
The growing impact of residential markets on economies encouraged the world's leading business publication to introduce its global residential property index in 2002.
The index includes more than 20 countries and uses information from loan institutions, estate agents and national statistics.
The latest figures show that in the last year house prices in 11 countries increased by about 10%.

Christopher Hart, senior treasury economist with Absa, ascribed the growth in South African property prices to the positive growth in the economy and low interest rates. The shortage of formal housing in the country is also a contributing factor.

Statistics South Africa's adapted figures of the gross domestic product (GDP) that was released earlier this month, showed that the local economy was growing at a rate of 3% on an annual basis. The GDP growth rate for the third quarter was 5.6%.

Erwin Rode, property valuator and economist at Rode & Associates, said on Tuesday that he was concerned over the sharp increase in house prices in South Africa.
He called it a double-edged sword and cautioned that people should be worried, as this trend could not continue in this vein.

The latest World Economic Outlook of the International Monetary Fund warned that the upswing in residential property prices, which is currently a global phenomenon, could be followed by a global slide. Should this happen, it could have a negative effect on the world economy.

The total value of residential property in developing economies increased by $20 trillion to more than $60 trillion over the past three years.