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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
Please visit our website at www.prop-law.co.za for more details.
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.

05 September 2014

Property market solid despite slowing pace - FNB

Property market solid despite slowing pace - FNB

The solid performance of the residential property market was continuing despite the pace of growth in house prices appearing to have slowed in recent months, claimed FNB.

The bank's latest house price index revealed that average prices last month rose by 5.4 percent year-on-year compared to 6.4 percent in July.

John Loos, a household and property strategist at FNB Home Loans, said this was the seventh consecutive month of gradual slowing in average house price growth since the 8.6 percent year-on-year increase recorded in January.

But he stressed the general picture continued to be of a market where growth was slowing and should not be confused with and was not yet a 'deteriorating market'.

The average price transacted last month was R947 051. House prices in nominal terms were 20.2 percent higher last month than in December 2007.

However, in real terms after adjusting house price increases for the impact of inflation, real house prices in July were 20.8 percent lower than in December 2007, the month in which the peak in real house prices was reached during the residential property boom in the last decade.

But FNB said the longer-term performance of the market was stronger over a 10-year period, with real house prices in July still 12.2 percent higher than in July 2004 while nominal house prices were 98.5 percent higher than in August 2004.

Loos said the residential market's solid performance was attributable to the balance between the supply and demand for houses.

He said FNB believed the slowing rate of growth in the residential market at this time was a welcome development.

'The market has regained its health but it should not get too far out of line with what are very weak economic fundamentals. Already real house price levels remain not far from historic highs of a few years ago. Any move into another house price boom/bubble would ultimately raise the risk of another 2008/2009 style 'crisis' for the residential and mortgage lending industry.'

Loos added that price booms could start to drive large scale speculative activity and buyer panic, where buyers rushed to get into the market in the fear that if they do not get in now, property would be unaffordable later, which could lead to 'market overshoots'.

He said the noticeably slower house price inflation rate placed some downside risk to FNB's annual average house price forecast of 7.3 percent for this calendar year when the bank revised it next month.

However, Loos said the bank did not expect a major house price inflation slowdown from now onwards under its 'base case' economic forecast scenario because it was projecting a mild improvement in real economic growth 'as we head towards 2015'.

But he warned that such an expected improvement in growth was based on the assumption of some normalisation in industrial action levels after a torrid recent period, which in turn should support better economic growth due to less strike-related disruptions to the economy.

Loos said FNB was still expecting a slower average house price growth next year because of expected interest rate hikes but did not expect to see too much price growth slowing.

'The key risks to the housing market outlook would be further stagnation in the economy with labour relation matters remaining highly disruptive or, alternatively, further significant rand weakening leading to higher-than-expected inflation and more severe interest rate hiking than forecast - or a combination of the two.'

Business Report

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