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12 July 2012

Home Buying Estate Agent Survey - 2nd Quarter 2012
FNB - South Africa
In the 2ND quarter Estate Agent Survey, the overall impression gained from the sample of agents surveyed is one of mild weakening in the market. This is to be expected as we move into winter, with seasonal factors playing a key role.

The question is, will the weakening prove to be more than just seasonal factors? Is a weakening economy starting to play a role too? It is tough to tell at this stage. The demand activity rating still remains higher in the 2nd quarter of 2012, than in the corresponding quarter a year ago when annualized economic growth slumped to a mere 1%. However, seasonal factors aside, the next most cited influence of agent near term expectations was “Economic Stress/General Pessimism”, which suggests that there may be some influence of recent economic weakness creeping in. Indeed, the summer 2011/12 period showed relatively solid quarter-on-quarter annualized economic growth rates of 3.2% and 2.7% for the final quarter of 2011 and 1st quarter of 2012 respectively. But recent high frequency economic indicators have been pointing towards global and local economic slowing. But how much has this affected the market to date?

Agents do, also, still point towards a very significant level of financial pressure, which manifests itself in a still-high percentage of sellers downscaling due to financial pressure, and this should be a concern given that interest rates offer huge relief at their current multi-decade lows.

Finally, the agents surveyed continue to harbor moderate expectations regarding near term future activity, with the level of the Estate Agent Confidence Indicator, which reflects agent near term expectations of market direction, not significantly higher than 2008 levels.
FNB Property Barometer_Home Buying Estate Agent Survey_2nd Quarter 2012

Residential Buy-to-Let and Rental Market
FNB - South Africa
CONCLUSION
With a considerable lag, following the initial residential market post-recession strengthening of 2009/10, the buy-tolet component of residential buying appears to be gradually making something of a comeback. Despite this mild improvement, however, at 11% of total residential buying buy-to-let demand remains significantly weaker than the around-25% of the boom years, and so it probably will for some time to come.

Much of the would-be buy-to-let market awaits the combination of a more attractive yield on residential property, which would be driven by stronger rental inflation, a better household sector financial situation, and for some aspirant investors significantly better capital growth prospects.

At present, though, it would appear that the agents surveyed believe that further mild strengthening in the Buy-to-Let market is expected in the near term. In our survey, we ask them to state whether they expect buy-to-let demand to increase (which gets a rating of +1), stay the same (rated as zero) or decline (rates as -1).

The FNB Buy-to-let Market Confidence Indicator is the average of these different ratings, and the 2nd quarter survey came out more positive at 0.047,slightly higher than the revised 0.041 of the previous quarter (scale of 1 to -1). This would suggest that the survey panel as a group is biased slightly towards strengthening buy-to-let demand in the near term, but the level suggests no expectation of “fireworks”, with the confidence rating having still well-down from a peak of 0.147 back in the 3rd quarter of 2009.
Property Barometer_Buy_to_let_and_rental_Jul 2012

The foreign impact on the South African Residential Market
FNB - South Africa
CONCLUSION
For the time being, foreign buyers remain a relatively small group of buyers of South African residential property. However, there are signs that their contribution to overall buying has been stronger in the 1st half of 2012 than in 2011, with the effects of the recession of a few years ago gradually passing on.

But more noticeable is a significant increase in the African continent’s contribution to foreign buying, according to the agents’ perceptions, and one could expect this group’s contribution to increase significantly in the coming years with Africa’s economic fortunes expected to improve.

Against this, the outflow of emigrant sellers from the SA market appears to remain subdued, as one would expect in what is still a relatively tough period economically for many developed countries. This restricts job prospects, and thus the limits the attractiveness of certain traditionally popular emigration destinations.

The “net foreign effect” on the South African residential property market thus appears to have been improved in 2012 to date, compared to 2011, according to the FNB Estate Agent Survey.
Property Barometer_The Foreign Effect on SA Property_Jul 2012

No clarity on Joburg billing chaos
Iol.property.co.za - South Africa
The Revenue Road Map designed to sort out the Joburg billing chaos saw the City of Joburg undertaking to resolve 66 000 disputes by June 30 - but the city still cannot say what progress has been made.

The road map was launched in November last year to resolve the billing crisis in stages, over a period of 18 months.

According to the plan, 66 000 problems registered before November last year were to have been resolved by June 30. Now, nine days past the deadline, the council has failed to provide answers to The Star's request for an update on the billing chaos. This despite their numerous promises to do so since Wednesday.
iolproperty

Huge transformation in SA’s real estate market
BetterBond - South Africa
Transformation in the SA real estate market has come a long way, with almost half of all home loan applications now being made by black buyers, compared with only about 12% a decade ago.

This is evident in the latest statistics from BetterBond, SA’s biggest mortgage originator, which represent 25% of all residential mortgage bonds being registered in the Deeds Office and include applications to and bond grants from all the major lending banks in SA.

These figures show that black homebuyers – including those in the affordable sector – have accounted for some between 45% and 48% of all bond applications in the past three months, compared with 43% in the same months of last year. In addition, black buyers, most of whom are also first-time buyers, now account for between 37% and 39% of home loan approvals monthly.
Huge transformation

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