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28 July 2011

Residential building statistics - May 2011
Absa - South Africa

Residential building activity giving mixed signals
An improvement in building activity in the South African housing market was evident with regard to the planning phase in the first five months of 2011 compared with the corresponding period in 2010. This improvement was mainly in the higher-density category of flats and townhouses. The construction phase, however, showed a contraction, driven specifically by the flats and townhouse category.
 
In the first five months of 2011 the real value of plans approved for new residential buildings was up by 2,4% year-on-year (y/y) to R7,23 billion, from R7,06 billion in the same period last year. The real value of new residential buildings reported as completed in January to May this year was down by 8,9% y/y to an amount of R5,47 billion, from R6,01 billion a year ago. The abovementioned real values are calculated at constant 2005 prices.
 
The number of new housing units for which building plans were approved by local government institutions was marginally up by 1,7% in the first five months of the year compared with a year ago. In May plans were approved for a total of 3 874 new housing units, 32% higher than in April, mainly due to seasonal factors. However, the number of plans approved in May was 41,6% lower on a year-on-year basis. This was the result of a high base of calculation of 6 635 housing units for which building plans were approved in May 2010.
Building stats May 2011
 
FNB Property Barometer - SARB Leading Indicator
FNB - South Africa
With oil prices still troublesomely high, the global impact of QE2 (the second round of US quantitative easing) wearing off, and a lack of further interest rate cutting locally, yesterday’s news that the May SARB Leading Business Cycle
Indicator had weakened further came as little surprise. On a month-on-month basis, the indicator showed negative growth for the 3rd consecutive month to the tune of -1.6%
 
On a year-on-year basis, the indicator also entered slightly negative growth to the tune of -0.08%. The significance of this for the residential property market is that the growth rate in the value of new residential mortgage loans granted tracks the Leading Indicator trend quite closely, with residential mortgage grants growth trends also typically “leading” the business cycle.
 
Property slump hits city centre
Iol.co.za - South Africa
Property prices for upmarket apartments in the city centre are in a deep slump and the owner of one of the city’s flagship developments – the high-profile Mandela Rhodes Place – is planning to sell off its residential holdings in the complex.

This comes in the midst of a global downturn in the property market, where in some cases, sectional titles in the CBD which previously sold for up to R28 000 a m² now fetched as little as R17 000 a m².

The slump has hit investors who bought in the CBD during the property boom and are now being forced to sell their apartments for less than what they paid for them. Some homeowners are losing hundreds of thousands of rand.

This comes as Eurocape, owner of Mandela Rhodes Place and the Taj Hotel, readies itself to release apartments it has held back for years.

Eurocape’s asset manager, Andrew Delport, said it was releasing more apartments at Mandela Rhodes Place, the company’s signature development, on a “drip” system, one or two at a time.
 
FNB Property Barometer - Rental and buy to let
FNB - South Africa
Weak economic times, and the fact that municipalities and parastatals are raising housing-related rates and tariffs is negative for home buying. However, this is not necessarily the case for the performance of the rental market, whose performance we expect to improve in the short to medium term.
 
1. RENTAL MARKET PERFORMANCE APPEARS TO HAVE BEEN STRENGTHENING
To date, the rental market appears to have shown some mild strengthening since last year. This at least is according to the StatsSA actual rental surveys which take place every three months as part of Consumer Price Index (CPI) survey. Whereas flat rental growth saw a broad acceleration first, from 6% year-on-year as at June 2010 to 8.3% in the June 2011 survey, more recently we have seen more noticeable accelerations in townhouse rental inflation, from 4% to 5.6% over the same period and in house rental inflation, from 3.6% to 4.3% over the 12 month period.
 
Housing review third quarter 2011
Absa - South Africa
The residential property market
The residential property market will continue to reflect conditions in the macro economy and the household sector up to the end of the year and in 2012.
 
Based on trends in home values in the first half of 2011, and prospects for the economy and household finances, nominal price growth in the middle segment of the market is forecast at between 1% and 2% for the full
year, rising to about 4% in 2012. In consideration of the outlook for nominal price growth and the projection of consumer price inflation averaging 5% this year and 6% next year, house prices are set to decline in real terms
in both 2011 and 2012.
 
Taking cognisance of the state of household finances (income, saving, debt, credit records, etc), labour market conditions, the level of consumer confidence, which was lower in the first half of the year compared with the corresponding period last year, and the prospect of rising interest rates in 2012 on the back of inflationary pressures in the economy, the year-on-year growth in mortgage finance extended to the household sector is forecast to remain in single digits up to the end of 2011 and into 2012.
 
 
 

 

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