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4 July 2013

Property Barometer - June 2013
FNB - South Africa
OUTLOOK - DESPITE RECENT IMPROVEMENT, HOUSING OUTLOOK MAY STILL BE A MEDIOCRE ONE WITH AN ECONOMY REMAINING UNDER SIGNIFICANT PRESSURE
The key data release in June was the SARB (Reserve Bank) Quarterly Bulletin, which confirmed our expectation that real household disposable income growth had slowed further in the 1st quarter from a prior quarter’s 2.4% quarter-on-quarter annualised rate to 2.2%. This has a bearing on residential buyer purchasing power growth, and largely explains the recent steady deterioration in Consumer Confidence in recent quarters.

In addition, interest rates continue to move sideways, with prime rate having remained at 8.5% since the 3rd quarter of last year., thus offering no additional demand stimulus since then. The combined impact of no interest rate cutting as of late and slowing disposable income growth could have constraininge implications in terms of growth in residential demand in the near term, with economic growth looking set to battle to exceed 2% for 2013 as a whole.

The current level of interest rates set by the SARB is at multi-decade lows, and indeed the stability of interest rates at these low levels has helped to gradually strengthen residential demand through 2012 and early-2013. But it is questionable whether this residential demand strengthening can continue at a time of clear economic weakness, and where we have already seen a steady slowing in growth in the area of real consumer demand as a result.

For 2013 as a whole, therefore, a weak economy and resultant weakened disposable income growth leads to the ongoing expectation that house price growth will continue to remain largely in single-digit territory in the near term, due to potential pressure on demand, not far outpacing consumer price inflation of near to 6%.
FNB Property Barometer_June 2013 House Price Index

Auction Alliance wins legal challenge on estate agency inspections
Iol - South Africa
Auction Alliance has won a constitutional challenge against laws that allow for targeted, non-routine inspections of estate agencies without a warrant.

In a ruling in the Western Cape High Court on Friday, Judge Willem Louw declared a section of the Estate Agency Affairs Act (EAAA) and of the Financial Intelligence Centre Act (Fica), inconsistent with the constitution and invalid.

Auction Alliance took the matter to court after the Estate Agency Affairs Board conducted search-and-seizure operations at its premises in Cape Town, Joburg and Durban in March last year.

While the board's inspectors did not have search-andseizure warrants, it relied on the impugned pieces of legislation - section 32A of the EAAA and section 45B of Fica.
Iol.co.za 

Listed property is a good bet, even in volatile times
Moneyweb - South Africa
Opportunities for investors are still there, thanks to higher yields and sound market fundamentals.
Volatile bond markets may have caused some suffering for SA’s listed property sector in recent weeks, but the opportunities for investors are still there, thanks to higher yields and sound market fundamentals.

Listed property prices decreased by 19 percent between 17 May and 24 June this year, something analysts say was a re-pricing in the face of changing global market dynamics.

These dynamics include US monetary policy decisions, uninspiring economics results in SA, and concerns about the Chinese economy.

The appeal of listed property is that it provides both a steady income stream and capital growth over time.
Moneyweb.co.za 

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