Regarded as one of the most successful investors in the world, Warren Buffett, American business magnate and philanthropist, recently stated that, although the US property market had disappointed him during 2011, he hasn’t giving up hope. In fact, he was reported to have said that he would buy up millions of US homes, if it were possible.
Buffet, who is the chairman and CEO of Berkshire Hathaway, said in his annual shareholders' letter that although the housing market did not rebound last year as he had expected, 2012 would be a different stage and he is once again betting on the housing market to recover.
According to Buffet, many of the younger generation Americans, who felt times were uncertain, choose to stay at home with their parents rather than purchasing property of their own. Now that the property landscape is more positive, he predicts that younger buyers will spread their wings and enter the market.
His market recovery analysis is also based on the fact that not as many homes have been built in the US recently, which will result in supply not meeting the demand for housing. The buyer’s market will slowly turn to a seller’s market as excess stock from the recession period is bought and a new demand for housing grows steadily.
Peter Gilmour, Chairman of RE/MAX of Southern Africa, agrees with Buffet that 2012 should yield greater market recovery, even though the South African market will deal with different issues to the US.
Recent South African figures suggest that there has been an increase in demand for residential property during the first few months of 2012.
"Although younger buyers are entering the market in South Africa, so are other buyers that were unable to in the past due to the unaffordable pricing of property and lack of access to finance. More realistic pricing, steady and low interest rates and buyers managing their debt and showing greater affordability are all having a positive impact on the transaction figures we are seeing. It is likely that this pro-cyclical behavior is likely to continue as consumer confidence remains optimistic," says Gilmour.
Local economists who predicted that 2012 would bring about further progress on the market recovery have so far been proven right as the property market sales figures continues to rise.
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