House prices continue to beat inflation, but can this continue?
House Price - South Africa
House prices in South Africa continue to grow strongly in the first quarter of 2014, keeping up the good momentum after a very strong 9.92% growth in 2013.
In the first three months of the year (Jan-Mar), YoY growth was 8.65%, 8.46% and 8.26% respectively. This exceeds inflation which was 5.78%, 5.93%, 6.05% respectively.
In the chart below notice how house price growth has consistently exceeded inflation since January 2013, which has resulted in good real house price growth last year and into this year.
So for the moment an investment in a house is growing your money ahead of inflation, which means if you have a house you are becoming wealthier in real terms, which is a good thing.
However, keep an eye on this dynamic as higher inflation forecasts for the rest of the year, coupled with looming interest rate hikes to support a struggling Rand may well start to slow house price growth again.
House Price South Africa
2014 Election property market behaviour
Lew Geffen Sotheby’s International Realty - South Africa
It is a sign of the increasing maturity of South Africa’s democracy and economy that the forthcoming elections have had no impact at all on the property markets and are unlikely to cause much of a ripple.
Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty in SA says, “In many countries where the markets are less stable and mature politically charged periods such as elections and transitions usually have a negative effect on the markets. In the past, election periods in South Africa have been the cause for a measure of economic anxiety with some people tending to turn to safe investment havens as the poll approached. However, this year, despite currency woes and a likely interest rate hike in the next few months, there has been no disruption to the property markets.”
Geffen adds, “We have not seen a dip in sales leading up to the actual election and ultimately despite the state of the currency and the country’s downgraded credit ratings, the property market is likely to remain in the healthiest state it has been since around 2007.”
2014 Election property market behaviour
South African property market giving increasingly good returns
Rawson - South Africa
Constant advice from Tony Clarke, the Managing Director of the Rawson Property Group, and other senior staff in the group to the effect that now is the time to get into buy-to-let residential property has, says Clarke, been confirmed by a highly informative report from Payprop, the nationwide rental accountancy firm used by so many estate agents and landlords.
This report, said Clarke, indicates that there are now 1,7 million rented homes in the “formal" residential market. This figure is higher than most analysts had previously estimated.
“Just over 60% of all South Africa’s ± 10,000 estate agencies are now involved in letting – often as a complement to their core selling work — but in a growing number of cases as the specialist, more important activity. Of the total of 1,7 million rented homes, approximately one-quarter are managed by rental agencies, leaving 1,3 million in the hands of private landlords.”
Transformation plan for estate agencies on track
IolProperty - South Africa
An initiative to speed up transformation in the estate agency sector was launched by Human Settlements Minister Connie September in Joburg yesterday.
September welcomed the 'One Learner - One Estate Agency' programme to transform the industry, in which only 10 percent of registered estate agents are black. 'The transformation we are seeking out of this will ensure the growth and survival of this industry,' she said. The programme sought to expedite greater participation by women, young people, and those with disabilities in the estate agent industry.
Government bodies had worked to ensure greater gender representation, but private business needed to catch up in this regard.