select
|

Outlook for residential property price growth increasingly positive

Recent statements made by estate agency Anne Porter Knight Frank, about the ten-year cyclical nature of property and the strong likelihood that South African residential property is now into a recovery phase, appear to be corroborated by the latest FNB Property Barometer published in the first week of May.

This shows a further, albeit slight, acceleration in home price growth, which is now up from a revised 7.1% year-on-year rate for February to 8.6% year-on-year for April.

This,  quoting the FNB review, indicates that since the ultra-high real house price growth peak of March 2008, real house prices adjusted for cost inflation were only 12.6% lower than the peak March 2008 high. In nominal (i.e. cash) terms they are 13.3% higher.

These figures in themselves seem to me to be fairly satisfactory. Other figures provided by FNB are even more impressive. These show that real house prices for February were 70.3% higher than they were in February last year and in nominal (cash terms) they are 231.7% higher they were in April 2000.  I doubt very much if many stock exchange shares can record similar growth.”

FNB Economist John Loos, ascribes the recent improvement to a good fourth quarter 2011 GDP performance (which was 3.2% year-on-year), to increased job security and, perhaps above all, to low interest rates.

I agree with FNB, when they suggest that psychologically the 2008/2009 recession had a long-term dampening effect on buyer confidence from which we have still not recovered. It did cause some people to become afraid of commitment and risk. These bad memories are, however, now starting to fade and the ongoing low interest rates are creating a perception that risk is now significantly lower.”

The generally positive note of the FNB review is supported by the group’s valuers’ report which reveals an increase in demand in the last quarter of 2011 and the cut-back in available stock. It is revealing that the FNB market strength index now stands at 45.2, showing that the 50/50 breakeven point between supply and demand is now not far off, although present stock still slightly exceeds demand.

The FNB survey  predicts that despite the anticipation of slower global and economic growth in 2012, which will probably feel the impact of recent developments in Europe, South African average house price growth for 2012 will be 6%.

Considering it was only 3.2% in 2011, this is a very real improvement and ties in with Anne Porter Knight Frank’s repeated statements that by mid-2013 the property sector will be seeing an upturn and house price growth will move ahead of inflation, which, it should be noted, FNB now say will be kept in the 6% bracket within the next few months and which in turn should lead to interest rates remaining low and possibly even dropping 0.5%.



  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
        
    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