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2 February 2012

Absa Housing Review - 1st Quarter 2012
Absa - South Africa

The residential property market
The residential property market is expected to continue to reflect conditions and developments in the macro economy and the household sector, impacting market activity, transaction volumes and price trends.
 
Nominal price growth in the middle segment of the housing market is forecast to remain relatively low in 2012 after coming in at 2,2% in 2011. In real terms, i.e. after adjustment for the effect of inflation, house prices are set to deflate further in 2012, based on expected low nominal price growth and headline consumer price inflation to remain above the 6% level. The continued subdued performance expected from property prices will be the result of the above-mentioned developments and forecasts with regard to the macro economy and the household sector.
Housing Review 2012 Q1
 

Bargain 'bloodbath' in SA property market
Iol - South Africa
Desperate property sellers are flooding the market, with properties being offered at knockdown prices around the country, including certain areas of Cape Town.

This property market "bloodbath" has been fuelled as cash strapped homeowners buckle under the pressure of a global economic downturn, escalating inflation and debt levels, a tight labour market, stricter credit laws and the property slump.

There are "hundreds, if not thousands" of distressed sellers across South Africa, according to estate agents, property experts and auctioneers canvassed by the Cape Times. While there were fewer desperate sellers in Cape Town than other parts of the country, the city was awash with bargains in densely developed areas where there were a surplus of properties for sale.

The areas include Tableview, Parklands and Muizenberg.
Iolproperty

 
Absa Mortgage Advances - December 2011
Absa - South Africa
Subdued mortgage advances growth in 2011
In 2011 the value of outstanding credit balances in the South African household sector came to R1 175,7 billion, which was 6,7% higher than in 2010 when growth of 6,9% was recorded. On a monthly basis household credit was up by R15,8 billion, or 1,4%, in December from November.
 
The value of outstanding private sector mortgage balances at monetary institutions, which includes both commercial and residential mortgage loans, increased by 2,5% last year (4% in 2010). The value of total mortgage balances was up by R1,6 billion, or 0,1%, in December from November.
 
The value of outstanding household mortgage balances increased by 1,8% in 2011 to an amount of R772,4 billion at the end of the year, which was 65,7% of total household credit.  Month-on-month growth of R1 billion, or 0,1%, was recorded in household mortgage balances in December compared with November.
 
Knight Frank Prime Global Cities Index
Knight Frank - UK
Asia leads luxury market slowdown
The value of prime property in the world’s key cities rose by only 0.2% in the final quarter of 2011. Kate Everett-Allen examines the figures and looks at whether prime property is still the safe haven investors and the super-rich consider it to be.
 
Although the Knight Frank Prime Global Cities Index, which tracks the performance of the world’s leading luxury residential markets, rose by 3% during 2011, the second half of the year saw the pace of growth slow considerably.
 
The luxury housing market is now seeing the pace of price growth slip for the second time since the 2008/09 global financial crisis (figure 2). In this latest cycle annual price growth peaked at 10% in Q2 2010 but has since slowed each quarter.
 
After the collapse of Lehman Brothers European and North American cities were largely responsible for the index’s slump. Since late 2010 it has been the Asian cities which have dampened price inflation. In Q2 2010 prices in
Asia were rising at an average rate of 23.6% each year, the comparable figure now stands at -1%.
 
FNB Property Barometer - Provincial House Price Growth
FNB - South Africa
While none set the world alight, it appears that the country’s smaller provinces fared slightly better in terms of house price growth than the 2 major ones
 
KZN AND EASTERN CAPE SHOW BETTER-THAN-AVERAGE HOUSE PRICE GROWTH
Examining the house price performance of the major provincial housing markets, Gauteng appears to have been the most stable in recent years, not showing as much price deflation during 2009, as the national house price decline, but not showing the same extent of “mini-recovery” in price growth in 2010/11 that the national market as a whole has shown.
 
So, in 2011, the average Gauteng house price increase was measured at 2.5% (compared to 3.1% growth on a national basis), slightly lower than the 2.9% recorded in 2010 (compared to 6% on a national basis).  We believe that Gauteng’s seemingly less cyclical market (in terms of price growth fluctuations) is due to its economy being arguably one of the most developed as well as one of the best diversified, not being as exposed to the highly cyclical manufacturing and related sectors as KZN and the Eastern Cape for instance.
 
In addition, Gauteng has a very small holiday market relative to the size of its primary residential market, and primary residential demand is far less cyclical than holiday residential demand due to more essential nature.
 

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