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27 September 2012

Household sector - SARB Leading Indicator
FNB - South Africa
The Reserve Bank (SARB) released its Leading Business Cycle Indicator for July today. On a month-on-month basis, the indicator rose by 0.8%, the 1st rise since February 2012.

However, the month-on-month Leading Indicator movements can be somewhat volatile, and for this reason we prefer to use a 3-month moving average for smoothing purposes. The 3-month moving average for the 3 months up until and including July still showed a decline of -0.38%, slightly less decline than the previous month but still painting a weak economic picture.

The economic picture emanating from the Indicator reflects a very uncertain global economic picture at present. On the one hand, the Leading Business Cycle Indicators of SA’s Major Trading Partner Countries made a positive contribution to the SARB Leading Indicator.

This weakness in the Leading Indicator is relevant for SA’s mortgage market, which tends to track it quite well, suggesting relatively flat near term growth in value of new mortgage loans and re-advances granted, and mortgage loans paid out.

As at July, the 3-month moving average for the value of new mortgage loans granted, according to the SARB stats,was -2.65% down year-on-year, while the value of mortgage loans paid out recorded mild growth of +7.05% over the period.
Household Sector SARB Leading Indicator Sep 2012

Call to free up state land for new homes
iolproperty - South Africa
Concerned South Africans recognise that the country faces a very serious housing backlog - the shortage is estimated at one to four million and various suggestions have been put forward on reducing this backlog.

Paul Henry, managing director of Rawson Developers, says the measures proposed take two forms: the recommendation that financial assistance be offered to the eventual owners, the developers or builders; alternatively, that the laws governing development and building be relaxed to make way for lower-cost, informal settlements where occupants can do a fair amount of the building themselves.

The local authorities in charge of housing are delivering to a certain extent but there is much work to be done, Henry says.

"The traditional methods proposed have been shown in SA to have merit if properly administered. However, the UK's experience indicates that more is required if housing backlog shortages are to be solved.
iolproperty.co.za

Property returns unexciting - hold steady for now
Moneyweb - South Africa
No sign of full recovery any time soon.
JOHANNESBURG – A report by the South African Property Owners Association and the IPD South Africa biannual property indicator to June 2012, has shown subdued property returns for the year to date.

IPD research director, Jess Cleland, says until economic growth picks up, the situation is unlikely to change. “For us to see a pickup in property returns we’re going to have wait and see a pickup in GDP growth, because without that there’s no demand coming through so vacancies remain quite high. It’s very difficult for property owners to try and drive rental growth when there’s all this excess in the market.”

Cleland says this is particularly true in office rentals, although there was some improvement in industrial and retail in the first six months of 2012.

She adds income returns from property remain high, at between 8 % and 9% depending on the type of property, making it worthwhile holding onto what you have.
moneyweb.co.za

Residential building statistics - July 2012 now
Absa - South Africa
Residential building activity remains under pressure
The first seven months of 2012 saw levels of activity in the planning and construction phases of new housing in South Africa remaining under pressure. Activity in respect of the planning phase showed a significant contraction compared with the same period a year ago, while the completion of new housing recorded mediocre growth.

The real value of residential building plans approved was down by R207,17 million, or 1,9% year-on- year (y/y), to R10,86 billion in the first seven months of the year, whereas the real value of residential buildings reported as being completed was marginally higher by R73,29 million, 0,9% y/y, at R8,02 billion over the same period.

The number of new housing units for which building plans were approved by local government institutions was down by 5 646 units, or 17,4% y/y, to a total of 26 851 in the period January to July this year. A significantly lower volume of plans approved occurred in the segments for smaller-sized houses and flats and townhouses. There has been a strong demand for these categories of housing in the past against the background of property investment and the affordability of housing and mortgage finance, impacted by trends in household finances.
Residential Building stats July 2012

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