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FNB CPI and Eskom tariff hikes
FNB - South Africa
With interest rates believed to be at or near to the bottom of the cycle, prospective home buyers would obviously do well to do interest rate scenario planning, asking the question "what if interest rates were to rise by the usual 4-5 percentage points? Could I still afford the bond repayment?" If not, perhaps look to buy cheaper.

But the affordability issue now clearly extends far beyond merely the cost of servicing a bond, to the issue of these sharply escalating costs related to housing. Assessment rates and utilities tariffs to homes are largely unavoidable, and with all these entities being monopolies, and their charges being compulsory, the consumer has limited alternative. Besides electricity and water saving measures, the only alternative is to buy a smaller home (to reduce operating costs) or cheaper house (to reduce assessment rates).

Prospective home buyers would do well to do the scenario planning in the area of rates and tariffs too, therefore, planning their purchase on the assumption that the current rates and tariffs paid on the targeted property will probably rise dramatically in the next few years.
FNB CPI and Eskom

Plan to upgrade 500 000 shacks by 2014
Property24.com - South Africa
Government plans to upgrade 500 000 shacks in informal settlements by 2014, through the provision of basic services and land tenure rights.

Speaking at the Social Protection and Community Development Cluster briefing on Tuesday, Minister of Social Development Edna Molewa said the government still wanted to work towards a country where there was no need for informal settlements, but pointed out that the demand for housing had outstripped supply.

There are 2 700 informal settlements across the country with 1.2 million households.

The new plan - to upgrade 125 000 informal settlement units annually over the next four years through the National Upgrading Support Programme - was an attempt to step up the delivery of affordable housing for all, she said.

FNB SARB Leading Indicator
FNB - South Africa
It is possible that the slowing in the pace of acceleration in growth of the indicator is pointing towards a lack of further interest rate stimulus, with the last rate cut having been back in August 2009. While there must surely be some stimulus still to feed through from last year's rate cuts, we are of the opinion that this stimulus will wear out somewhere in the second half of 2010. Then, it will be up the economy to support further growth in the residential property and mortgage market. We have seen the manufacturing sector recovering, as a result of some global recovery as well as due to the need to "re-stock" the economy after a considerable inventory run-down. Positive economic growth is indeed expected for 2010, but it is not expected to totally replace the positive stimulus for the residential mortgage from 2009 interest rate cuts, and as a result we expect new mortgage loan growth to peak around mid-2010 and taper off gradually thereafter, as the interest rate stimulus wears thinner.
FNB SARB leading indicator

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