Tainted credit records depress property market
Tainted credit records depress property market
Tainted credit records depress property market
More than 8.6 million credit-active consumers with damaged credit records were contributing to the poor performance of the residential property market this year, Jacques du Toit, the senior property analyst at Absa, said yesterday.
Largely because 46 percent of a total of 18.6 million credit-active consumers were in this predicament, in the first quarter, a recovery in house prices which started last year, when house prices rose 7 percent, is rapidly fading. This year prices are rising only about 1 percent year on year, according to Absa, based on mortgage loan applications approved by the bank. And in real terms - with inflation stripped out - prices are falling.
So far this year, prices of small houses had fallen 6.6 percent in real terms, medium-sized houses 3.6 percent and large houses 2.5 percent, Du Toit said.
A similar trend in residential property was noted by Standard Bank on Wednesday.
Research analyst Sibusiso Gumbi said median house prices rose 1.6 percent year on year last month, down from year-on-year growth of 2.4 percent in July. In real terms, prices "are in negative territory", Gumbi said.
Nominal house price growth reached a peak of 32.2 percent in 2004, according to Du Toit. Growth subsided to 4 percent in 2008, as the economy moved towards a recession. Prices fell 0.2 percent the following year.
The property market globally has been weak since the financial crisis of 2007/08 and the recession of 2008/09. Bloomberg reported yesterday that British house prices were 2.6 percent lower in the three months to August compared with a year earlier. UK house prices rose 147 percent, on average, between 2000 and the market's peak in October 2007.
"That was 11 times faster than consumer-price inflation of 13.2 percent. Values then slumped 21 percent through February 2009, though they've since increased 12 percent," Bloomberg said.
FNB home loans strategist John Loos said, in the US, the Case Shiller house price index revealed a year-on-year decline of 4.6 percent in June.
On the domestic front, Absa's house price index showed that, in the case of large houses, the market has taken a turn for the worse.
In nominal terms, the index for houses between 221m2 and 400m2, has fallen steadily each month from 407.6 points in March to 395.6 last month.
The indices for medium and small houses have moved up in the period. Medium-sized house are between 141m2 and 220m2, while small houses are between 80m2 and 140m2.
Du Toit said nominal house price growth would be "well within single digits for the full year, while in real terms prices are expected to decline in the face of rising consumer inflation". Inflation is expected to breach the ceiling of the Reserve Bank's 3 percent to 6 percent target range. Gumbi forecast nominal price growth in "low single digits".
Tainted credit records depress property market
More than 8.6 million credit-active consumers with damaged credit records were contributing to the poor performance of the residential property market this year, Jacques du Toit, the senior property analyst at Absa, said yesterday.
Largely because 46 percent of a total of 18.6 million credit-active consumers were in this predicament, in the first quarter, a recovery in house prices which started last year, when house prices rose 7 percent, is rapidly fading. This year prices are rising only about 1 percent year on year, according to Absa, based on mortgage loan applications approved by the bank. And in real terms - with inflation stripped out - prices are falling.
So far this year, prices of small houses had fallen 6.6 percent in real terms, medium-sized houses 3.6 percent and large houses 2.5 percent, Du Toit said.
A similar trend in residential property was noted by Standard Bank on Wednesday.
Research analyst Sibusiso Gumbi said median house prices rose 1.6 percent year on year last month, down from year-on-year growth of 2.4 percent in July. In real terms, prices "are in negative territory", Gumbi said.
Nominal house price growth reached a peak of 32.2 percent in 2004, according to Du Toit. Growth subsided to 4 percent in 2008, as the economy moved towards a recession. Prices fell 0.2 percent the following year.
The property market globally has been weak since the financial crisis of 2007/08 and the recession of 2008/09. Bloomberg reported yesterday that British house prices were 2.6 percent lower in the three months to August compared with a year earlier. UK house prices rose 147 percent, on average, between 2000 and the market's peak in October 2007.
"That was 11 times faster than consumer-price inflation of 13.2 percent. Values then slumped 21 percent through February 2009, though they've since increased 12 percent," Bloomberg said.
FNB home loans strategist John Loos said, in the US, the Case Shiller house price index revealed a year-on-year decline of 4.6 percent in June.
On the domestic front, Absa's house price index showed that, in the case of large houses, the market has taken a turn for the worse.
In nominal terms, the index for houses between 221m2 and 400m2, has fallen steadily each month from 407.6 points in March to 395.6 last month.
The indices for medium and small houses have moved up in the period. Medium-sized house are between 141m2 and 220m2, while small houses are between 80m2 and 140m2.
Du Toit said nominal house price growth would be "well within single digits for the full year, while in real terms prices are expected to decline in the face of rising consumer inflation". Inflation is expected to breach the ceiling of the Reserve Bank's 3 percent to 6 percent target range. Gumbi forecast nominal price growth in "low single digits".
Comments
Post a Comment