Absa senior economist Jacques du Toit said yesterday residential property had always been a good investment and that though in the short term investors could expect bad performance , this would change in 2010. ?Looking forward this year and next year, the market will deliver a poor performance in terms of price growth. In real terms, there will be continued deflation and in nominal terms there will be marginal growth or it will be flat,? said Du Toit.

But he said that for the three years after that starting in 2010, the bank expected price growth to increase to well over 10% in nominal terms annually. This was because Absa expected lower inflation, lower interest rates and improved overall economic conditions during that period. ?If you?re taking a five-year view, you are going to benefit as an investor,? he said. As far as existing home owners were concerned, Du Toit said that in times like these they should ?just hang on and wait it out? unless they were forced to sell their houses because of financial strain or for other reasons such as a work transfer .

Berry Everitt, MD of real estate group Chas Everitt International, agreed with Du Toit and said he expected the demand for property to start increasing in the next few years. Everitt said because the market was ?very flat at the moment? it was not going to see much in the way of new residential developments going up. ?This will mean that in the years to come there will be a shortage of residential property. Naturally, when you find a shortage of property, you will also have an increase in demand for property,? he said.

Herschel Jawitz, CE of Jawitz Properties, said he would support the view that over the long term property was generally going to be a good investment. ?Don?t forget that you are getting a return with substantially less risk or volatility than investing in the equities market. And that some parts of what we saw in the early 2000s will be repeated, perhaps not to the same extent, once we are through the current interest rate cycle. And that is that there will be a lot of people who are either unhoused or who have been forced out of the property market who will be coming back in,? said Jawitz. He said a lot of the ?phenomenal growth? the market saw in the early 2000s was largely a ?correction of a significantly undervalued South African residential property market?. ?And therefore the future returns will be far more normal than we?ve seen in the past,? said Jawitz. Last week, Absa released new figures showing real house prices took their biggest plunge in 15 years in May. The housing market has in the past few months been rocked by high inflation and soaring interest rates.