Fourth Quarter Housing Review
Absa - South Africa
- Only marginal nominal house price growth occurred in the middle segment of the market in the third quarter of 2012. However, in real terms, i.e. after adjustment for the effect of consumer price inflation, house prices continued to decline compared with a year ago. In the segment for affordable housing, year-on-year price growth remained in positive territory in both nominal and real terms in the third quarter, whereas in the luxury category price growth remained low in nominal terms, while real price deflation continued in this segment of the market.
- Housing affordability, as measured by house prices and mortgage repayments as a percentage of household disposable income, improved somewhat further in the second quarter of 2012, but many households’ ability to take advantage of these improving affordability trends is still hampered by the general state of their finances.
- The outlook for the residential property market remains benign for the rest of 2012 and 2013 against the background of trends in and prospects for the economy and the household sector. As a result, relatively low nominal house price growth is forecast up to the end of the year and for most of next year. Real house price deflation is projected to continue over the short to medium term in view of expected low nominal price growth and headline consumer price inflation forecast to remain above the 5% level.
Bank 'fiddled home loans to boost flagging profits'
IolProperty - South Africa
Saambou bank deliberately manipulated interest rates on its bond accounts to increase profits at a time when the bank was undergoing a "squeeze on its profit margins".
These are the allegations made by forensic accountant Gregory Johnson, in a report submitted to the North Gauteng High Court in an ongoing case between bond recalculator Emerald van Zyl and FNB, the bank which took over Saambou's home loan book after Saambou was placed under curatorship in 2002.
Van Zyl alleges that FNB owes former Saambou bond holders millions in incorrect and illegal interest charges.
In 2006, FNB recalculated all the Saambou bonds, and paid back R154 million to clients, but Van Zyl claims this is just the tip of the iceberg.
Property Barometer - House Price Index 2012
FNB - South Africa
We believe it possible that the declining trend in year-on-year growth in the FNB House Price Index will come to a halt late in 2012, and that indications of recent improvement in residential demand, both from our valuers as well as from our FNB Estate agent survey, will lead to some stabilization in the house price growth rate.
However, looking forward into 2013, while year-on-year price growth may pick up a little from the October low level, we are of the expectation that overall house price growth will be a little slower next year than the average for the entire 2012.This is based on our view of the global and domestic economy, as well as on the level of household sector indebtedness.
The average price growth for 2012 is projected at 6.1%, with only 2 months’ worth of data left to come. However, not only does the global and local economy remain mediocre, but more importantly for the housing market is that we have seen real disposable income growth broadly slowing, since the very strong rates of near to 6% in 2010/early-2011, down to 3.5% by the 2nd quarter of this year. We believe that it will now move in a slower range closer to economic growth rates, because the rapid “normalization” (growth) in the wage bill as well as investment income, off a low base after the 2008/9 recession, has all but been completed.
FNB Property Barometer_October 2012 House Price Index
Rode Report - Property in the doldrums
Rode - South Africa
Set against the backdrop of moderate economic activity and floundering business confidence, non-residential property fundamentals continue to struggle. This is according to property economist Erwin Rode in the latest issue of Rode’s Report on the S.A. Property Market.
Office and industrial vacancies are for now unable to drop while growth in nominal rentals is finding it hard to beat inflation. In fact, in the second quarter of 2012, only prime office rentals in Pretoria (+1%) and Durban (+1%) decentralized could muster some growth in nominal rentals. In both Johannesburg (-2%) and Cape Town (-1%) office rentals in the suburbs were on average slightly lower than a year ago.
Industrial rentals also continued to show moderate growth as South African manufacturing dwindles under international economic pressures. In the second quarter of 2012, industrial rentals on the Central Witwatersrand and in Durban were up by a modest 3%. In Port Elizabeth they stayed at roughly the same level as a year ago, while in the Cape Peninsula (-2%) they were marginally lower. In the reporting quarter, East Rand rentals recorded the highest growth rate of just below 7%.
Joburg property valuations to be finalised soon
IolProperty - South Africa
Joburg residents should be vigilant and obtain clarity about their property valuations as there is confusion between two different supplementary valuation rolls which have been released in recent months.
Residents have until November 23 to examine a secondary supplementary roll recently issued.
A few months ago, the values of about 83 000 properties were affected by a first supplementary valuation roll.
Hot on the heels followed another valuation roll, this time affecting around 25 000 properties.
DA councillor Linus Muller, member of the Section 79 oversight committee for finance, said residents could be confused between the two rolls.