select
|

House price index drop to 6.8 percent, as mortgages slow

(by Siphamandla Mkhwanazi, economist at Standard Bank)

Standard Bank’s house price index slowed to 6.8 percent year on year in October from a slightly upwardly revised 6.9 percent in September.

Sub-indices show that:

Freehold properties accelerated to 8.9 percent from an upwardly revised 8.3 percent – originally 8.1 percent – in September.

Sectional title properties slowed to 8.1 percent from 8.9 percent in September.

The weighted median price a square metre rose 4 percent month on month to R4 403, from R4 234 in September. The 2016 house prices a square metre have underperformed by between 8 percent and 22 percent compared with the previous four years.

The median price of a freestanding house applied for and approved by Standard Bank was R950 000 in October, down from R970 000 in September 2016. The median price of a flat or townhouse was R800 000, down from R810 000 in September. The weighted median price of the two was R904 184, down from R906 084 in September.

Growth in house prices has been moderating for the past four months on tougher economic conditions and rising political uncertainty. MMI/BMR’s Consumer Financial Vulnerability Index (CFVI) shows that since the fourth quarter in 2015 debt servicing capabilities has been more of a concern to consumers than their income levels, their ability to save or their ability to consume.

And, according to the NCR, 40 percent of credit active consumers had impaired records in the second quarter of 2016, up from 35 percent in the second quarter of 2015.

Household credit growth slowed to 1.2 percent year on year in September from 1.4 percent in August but, if we adjust the data for African Bank, growth slowed to 2.6 percent from 2.8 percent. Within household credit, mortgage advances (60 percent of total) slowed to 3.7 percent from 3.9 percent.

Encouragingly, SB’s financial conditions index showed a mild improvement in August, although it still indicated restrictive financial conditions.

Similarly, the BER/EY’s financial services index shows that in the third quarter of this year retail banks were still applying tight lending criteria when approving loans to households, although this had eased somewhat from the fourth quarter of 2015.

Looking ahead, we expect consumers to remain under pressure into 2017, with household expenditure only recovering in the third quarter, once the SARB starts cutting interest rates. We expect property prices to remain under pressure for the rest of 2016 and into 2017.




  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    • 20 Jun 2018
      The average size of bond granted in SA has grown 7,7% in the past 12 months to R934 000, according to BetterBond, the country’s biggest bond originator.
    • 19 Jun 2018
      In the current market, letting out a property can be a good option as rental demand remains strong, especially in the northern suburbs of Johannesburg. This is according to Chris Renecle, MD of Renprop. However he says that before homeowners let their property out, there are five key points they should make sure are covered before they market the property for rent and sign any lease agreements.
    • 19 Jun 2018
      The Capetonian dream is to live by the ocean with the iconic mountain making an appearance somewhere in the horizon. But, that dream comes with a hefty price tag that many simply cannot afford. But, should you venture some kilometres out of the city centre, entirely new realms of beachside bliss await you …
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK