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30 April 2015

A tale of three cities
Rode - South Africa
At the end of last year, house prices in Cape Town and Bloemfontein were accelerating, while the exact opposite was happening in Port Elizabeth – this according to the latest Rode’s Report on the SA Property Market.

Erwin Rode, CEO of Rode & Associates, publishers of the report, said the editor of the report compared the unemployment rate in the country’s major metros to house-price growth to find possible reasons behind these trends. Cape Town, with the lowest unemployment rate, in recent years also recorded the strongest growth in house prices. On the other end is the Port Elizabeth-Uitenhage metropolitan area with the highest unemployment rate and poorest growth in house prices. The robust inverse relationship between these variables again confirmed that house prices are largely driven by the performance of the local economy – holding constant differences in new supply, said Rode.

An anomaly was Bloemfontein. Despite having a higher unemployment rate, it was able to show growth in house prices at a par with Cape Town. Mike Spencer of Platinum Global, an expert on the Bloemfontein market, said that the explanation for Bloemfontein’s performance could be found on both the demand and the supply side. “On the supply side, while there is a Spatial Development Plan (SDP), there has been little planning by Mangaung for infrastructure like roads, sewage, water and electricity.” In addition, the demand for houses might have been supported by strong growth in the number of public-sector employees, as well as their unsustainably strong salary increases, he said.
Rode

Sale will fail if you don't pay in time
IolProperty - South Africa
A standard agreement of the purchase and sale of immovable property typically includes a suspensive condition relating to the buyer arranging and securing mortgage finance. This allows buyers to nullify a deal if they cannot obtain a bond in a stipulated time frame. In essence, the agreement is suspended until the bond is approved.

Fulfilling the suspensive condition is a prerequisite for the contract. If an appropriate bond is not approved by the due date, the sale agreement lapses. Most sale agreements provide for the insertion of this condition for the buyer's benefit and compliance can be waived. This could include when someone buys a property on condition a specified amount of the price be raised with a bond.
IolProperty

On-going slowdown in South African home price growth could benefit less affluent buyers
Rawson - South Africa
There are, says Mike van Alphen, National Manager of Rawson Finance, the Rawson Property Group’s bond origination division, various ways of looking at the most recent data supplied by ABSA (in their 10th April Home Loans Report). This reveals that since January 2014 house prices have more or less declined steadily.

Some, says van Alphen, might take the view that with middle sector year-on-year house price growth now down to 6,2% (significantly lower than the 10% recorded in August, September and October last year) property investment is no longer as rewarding as it was hitherto.

“Those who are inclined to feel this way,” says van Alphen, “are probably overlooking the other highly relevant figure in the ABSA April report – which is that year-on-year real price growth, i.e. allowing for inflation, was still at 3,3% in February this year. That is satisfactory in any struggling economy and even if, as predicted, rising fuel and other increases push inflation above 6% by the end of 2015, it seems likely that house price growth will remain ± 2% ahead of the cost price index. Any talk, therefore, of opting out of property for other investment channels is, in my view, misguided.”
Rawson

Credit and Mortgage advances - March 2015
Absa - South Africa
Continued subdued growth in household credit and mortgage balances

Year-on-year growth in the total value of outstanding credit balances in the South African household sector continued along its relatively subdued level in the first quarter of 2015, although growth was marginally up to 3,6% at end-March compared with 3,3% at end-February. This uptick in growth in credit balances came on the back of somewhat higher growth in household mortgage balances, which supported growth in household secured credit balances, whereas growth in unsecured balances tapered off further.

Household secured credit balances (R1 085,2 billion at end-March and 75,9% of total household credit balances) registered growth of 3,2% year-on-year (y/y) at the end of March, up from 2,8% y/y at end-February. Secured credit includes instalment sales, leasing finance and mortgage loans, which have a share of 77,2% in household secured balances.

Growth in household unsecured credit balances, with a value of R344,8 billion and having a share of 24,1% in total household credit balances at end-March, came to 4,8% y/y at the end of the first quarter of 2015 (5% y/y at end-February). Unsecured credit consists of general loans and advances, credit card debt and overdrafts.
Credit and mortgage advances

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