Year’s End is Neither an End, nor a Beginning

 

There are winners and losers in any market, but 2014 was filled with new challenges.

Smart investors beat the market averages, while others struggled. As part of the global village, South Africa’s markets are directly impacted by world markets. There are some positive market trends. Many estate agents had their first bumper period since 2008. High demand for rentals is an encouraging trend for landlords. The growth of the black middle class to around 4.2 million is a stabilising factor. New developments seem to be on the rise, despite tough markets. Steyn City is an example of the increase in ‘live, work, play’ environments.

Andrew Golding, CEO of Pam Golding Properties, highlighted some key global trends at their recent year end function. He says, “After the collective pre-crisis boom, European housing markets took two paths. Denmark, Greece, Ireland, the Netherlands, Portugal and Spain dropped sharply; some still continue to fall. Others including Belgium, Britain, Norway and Sweden only dipped before rebounding”.
Americans used to be far more indebted than Europeans. But Americans’ debt is now below 105% of income after tax, whereas that of Euro-zone households is almost 110%. The all-important U.S. residential sales market is on the move again. January 2014 marked the 23rd consecutive month of increase for the Case-Shiller house price index, and recent reports show house price growth remains in positive territory, although slowing down.
Golding adds: “Even as analysts worry about the strength of the global economic recovery, there are concerns that the record low interest rate environment is fuelling new housing bubbles”. The Swedish word ‘bo’ means to live; ‘sambo’ to cohabit. As more people struggle to get on the housing ladder, a new word has been coined: ‘mambo’ – to live with your mum. It’s a reflection of the difficulties facing first-time homebuyers in Sweden, like most other places around the world.

Golding’s outlook for 2015 is that the prevailing market conditions will continue for the first six months, with high levels of buyer activity, significant shortages of appropriately priced stock and gradually-increasing house growth, against the backdrop of weak economic performance and a moderately increasing interest rate cycle.

I hope that despite the challenges and the unexpected shocks investors face from time to time, you continue maximising the opportunities that exist in any market.

Prosperous investing

Neale

“Year’s end is neither an end, nor a beginning but a going on, with all the wisdom
that experience can instill in us” – Hal Borland