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31 March 2016

Credit and mortgage advances
Absa - South Africa
Further uptick in household credit and mortgage balances growth

The value of outstanding credit balances in the South African household sector showed growth of 4,8% year-on-year (y/y) to R1 495,4 billion at the end of February 2016. Growth in both secured and unsecured credit balances was somewhat higher at end-February compared with the preceding month.

Growth in the value of household secured credit balances (R1 126,8 billion and 75,4% of total household credit balances) increased to 4,1% y/y at end-February from 3,9% y/y at the end of January. Growth in mortgage balances showed a further improvement, whereas growth instalment sales balances (22% of secured balances and mainly related to vehicle finance), slowed down to 2,2% y/y at end-February, which was the lowest year-on-year growth on record since mid-2007. The downward trend in growth in instalment sales balances is in line with declining new vehicle sales volumes.

Growth in household unsecured credit balances (R368,6 billion and 24,6% of total household credit balances) came to 6,9% y/y at the end of February, up from 6,6% y/y at end-January.
Credit and mortgage advances (Feb 2016)

Political risks turn off local and foreign property
SA Commercial Prop - South Africa 
Property fund CEOs are concerned that economic and business conditions are so poor that the listed property sector will achieve very weak returns this year relative to recent years.

SA Commercial Prop News has learned some news that they feel that they have to very careful this year in order to generate returns for their shareholders.

Recently the South African Real Estate Investment Trust (Reit) conference was held at the Maslow Hotel in Sandton, where various concerns were raised about the current state of the sector.
SA Commercial Prop

Do your homework and score homeowner tax deductions
IolProperty - South Africa
As another financial year draws to a close, taxpayers will be getting their affairs in order and getting ready to submit their tax returns.

Many will be assessing their financial situations and looking at the tax deductions they will be able to claim back from the SA Revenue Services. Taxpayers are entitled to claim deductions, but the onus is on them to prove that a particular amount is deductible, and they need to justify the claim by showing the calculation of how they arrived at the deduction figure.

Regional director and chief executive of RE/MAX of Southern Africa, Adrian Goslett, says that although many homeowners will qualify for tax deductions, it is sometimes difficult to establish the amount of interest on bonds that is tax deductible.
IolProperty

The FNB-TPN Residential yields review
FNB-TPN - South Africa
The trend of yield compression, which started in 2014, continued through the 4th quarter of 2015 Through the entire 2015, the TPN-FNB National Average Gross Residential Yield has continued its downward trend which, according to the latest revised estimates, started back in early-2014. The national average yield declined further from 8.53% as at the 3rd quarter of 2015 to 8.48% in the 4th quarter

Although the Home Buying Market began to show signs of slowing demand growth last year, to date the market has remained well balanced, with significant supply constraints, keeping house price inflation mildly faster than rental inflation.

We had expected a little more in terms of rental inflation by now, given the trend of gradually rising interest rates. But against this we have had a very weak economy, and this may be placing significant financial constraints on the tenant population and its ability to absorb rental increases.
Rental yields review

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