Absa Third Quarter Housing Review
Absa - South Africa
Summary
- Residential property market conditions continued to improve up to mid-2010, with house price growth increasing further in both nominal and real terms.
- In the affordable segment of the market the average price of a house increased by a nominal 2,6% y/y to a level of R296 100 in the second quarter of 2010, declining by 1,9% in real terms.
- Middle-segment house price growth averaged a nominal 14,4% y/y in the second quarter of 2010. This brought the average price to a level of R1 075 600 in the quarter. House prices in the middle-segment increased by a real 9,4% y/y in the second quarter of the year.
- The average price of luxury houses dropped by a nominal 1,8% y/y to a level of about R4,4 million in the second quarter of the year. In real terms prices of houses in the luxury segment were down by 6,1% y/y in the second quarter.
- At geographical level house prices increased further in nominal terms on a year-on-year basis in the second quarter of 2010, while in real terms prices were slightly down in some areas compared with a year ago.
- After some deterioration in the affordability of housing in the second half of 2009 on the back of rising house price growth while growth in household income remained under pressure, affordability did not deteriorate further in early 2010. This is based on the latest trends in the ratios of house prices and mortgage repayments to household disposable income.
- Taking into account house price developments in the recent past, year-on-year price growth appears to be near an upper turning point, largely as a result of the base effects of a recovery in house price growth in the second half of 2009. This is expected to impact the trend in price growth in the second half of this year.
- Nominal house price growth of around 10,5% is forecast for 2010, after prices declined by a marginal 0,2% in 2009. Based on the outlook for nominal house price growth and a projected average consumer price inflation rate of about 5% in 2010, real price growth of between 5% and 5,5% is forecast for this year.
Six reasons not to buy property
RealEstate Web - South Africa
...and why none of them hold much water.
We often hear about real estate investors who have been very successful in building wealth-creating portfolios. We may believe that they have some very special skill or ability, that there is something they know which nobody else does. At other times, we think it was pure luck or coincidence that an investor succeeded, that circumstances have since changed or that it just can't be done. Our cynicism encourages us to do nothing, to avoid the risk.
Yet history proves that doing nothing could be the most risky of all. Apart from the missed wealth creating opportunities, doing nothing translates into a lack of self-development, a missed chance to learn and grow. If we delve deeper, it is clear that most of the reasons people use not to invest are actually based more on emotion than business savvy. We rationalise our fear using calculated arguments as to why it can't or won't work. But the truth is that none of these arguments really hold much validity.
So let's discuss the top six reasons why people decide not to invest in property. And lay them to rest-once and for all.
RealEstate Web
Absa Building Stats - June 2010
Absa - South Africa
Residential building activity still under pressure
The residential building and construction sector continued to experience some tough conditions up to mid-2010, based on data released by Statistics South Africa for plans approved for new housing as well as new housing construction.
The real value of plans approved for new residential buildings dropped by 5% year-onyear (y/y) to a level of R8,61 billion in the first half of 2010 from R9,07 billion in the same period last year. The real value in respect of new residential buildings constructed was down by 21,8% y/y to R7,15 billion in the first six months of the year from a level of R9,14 billion in the corresponding period of 2009. These real values are calculated at constant 2005 prices.
In the planning phase of new housing, reflected by building plans approved, levels of activity were very much under pressure in the first half of 2010, especially in the segments of housing less than 80m² and higher-density housing (flats and townhouses).
In the month of June, a further year-on-year decline was recorded in plans approved by local authorities for new housing, although this contraction was relatively small.
Absa Building Stats
Pay Off Your Bond Faster
Private Property - South Africa
Many consumers aren't aware that even a small additional payment into their home loan account every month can make a big difference.
"If you have a 20-year bond of R500 000 at an interest rate of 12.5%, and you increase your bond repayment by just R300 a month, you could pay off your bond almost four years earlier and save more than R200 000 in interest," says Adrian Goslett, CEO of RE/MAX of Southern Africa.
Given the difficult economic conditions, however, many homeowners find their budgets stretched to the limit and should rather focus on saving on interest until the tides change.
In order to fast-track the repayment of your home loan with the aim to save on interest, Goslett advises homeowners to secure the best possible interest rate on their home loan. "Every 0.5% reduction in the interest rate on a home loan of R1-million represents an interest saving of more than R85 000 on a 20-year bond. Even 0.1% will make a significant difference over the life period of a bond," explains Goslett.
Private Property
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