Absa - July 2011 Residential Building Stats
Absa - South Africa
Short-term momentum in residential building activity appears to be waning
How margins get squeezed
Cape Business News - South Africa
THE profit margins of both developers and contractors have been squeezed in order to bring new developments to the market during the economic downturn, says Colin Green, a director of Cape Town’s Rabie Property Group.
Green says residential developments have been particularly hard hit following the downturn in the property market that most industry players started experiencing towards the second half of 2007. “The gap between the price of existing and new stock remains high while the introduction of the National Credit Act, together with the tightening of the banks’ lending criteria, have made it difficult for many would-be buyers to access finance.”
Green says that while the price of materials has come down since the end of the boom, labour prices have continued to escalate. “There is currently very little building work taking place which has resulted in margins coming under pressure. Some contractors are happy to secure work at cost just to pay their overheads and hope to work smartly in order to make a small profit at the end of the contract.
Current building prices are similar to the tendered rates of several years ago.” Green says many purchasers of new properties are unaware of the various components that make up the selling price of a unit.
Cape Business News
Absa - August 2011 Mortgage Advances
Absa - South Africa
Noticeable slowdown in growth in mortgage advances and total household credit Based on data released by the South African Reserve Bank, growth in credit extended to the domestic household sector came to 5,2% year-on-year (y/y) in August 2011 (6,6% y/y in July). On a month-on-month basis the amount of household credit was down by R361 million, or a marginal 0,03%, to R1 137,8 billion in August.
Where to for the commercial property Industry
Moneyweb - South Africa
....Asks Rodney Luntz.
With the Rand having depreciated, growth in the SA economy predicted to be sharply down and the global economy in turmoil - “Where to now for the commercial property industry?”.
From an industrial perspective everyone in the market was clamouring for a weaker rand and given recent circumstances, commercial property experts are now pondering whether this will be the life line for the industrial property market?
Although a weaker rand will make South Africa’s manufacturers much more competitive, the truth is that the global crisis has dented demand and no matter how weak the rand is or becomes, if demand is down then the industrial sector as a whole will decline. Until the global economy and our own economy begin to recover, the industrial sector is going to remain depressed.
Furthermore according to economists our own growth forecasts have been reduced to 3.2% from 3.7% previously and to 3.6% from 3.9% next year. This growth rate will have very little effect on our employment numbers which again must have a knock on effect on the property market.