Third quarter housing review
Absa - South Africa
The gradual slowdown in nominal year-on-year growth in the average value of homes in the middle segment of the market, which commenced in the fourth quarter of last year, continued in the second quarter of this year. Declining real year-on-year house price growth came on the back of slower nominal price growth and rising inflation in the second quarter. Price growth in the affordable and luxury housing segments also tapered off in the second quarter of the year. The widespread slowdown in house price growth up to mid-2015 came against the background of economic developments and trends in household finances and consumer confidence.
House price growth has softened since late 2014 and is forecast to remain in single digits in 2015 and 2016. Price growth is set to be lower this year compared with the past two years against the background of trends in and the outlook for key macroeconomic and household sector-related factors. Based on the current forecasts for nominal house price growth and consumer price inflation, marginal real price inflation is projected for this year and next year.
Housing Review 2015 Q3
Lawyers decry Joburg's rates arrears plan
IolProperty - South Africa
The City of Joburg's new plans to crack down on defaulting ratepayers have ruffled the feathers of Joburg Attorneys Association (JAA) lawyers, who feel they are being reduced to debt collectors.
Conveyancing lawyers are now expected to collect all arrears before being issued with clearance certificates for properties being sold despite section 118 (3) of the Local Government Municipal Systems Act stipulating the city can demand only two years of arrears.
The city is prohibited to withhold such a certificate if arrears over the two-year mark aren't paid.
Anton Theron of the JAA said: "The city should be pursuing its debt on a regular basis, not just at the time of sale. It can't expect us to become its debt collectors. We cannot demand outstanding arrears from our clients. This can only be done through an urgent court order or on the instruction clients."
Along with the Pretoria Attorneys Association, the Gauteng Law Council and the Law Society of South Africa, the JAA was liaising with the city about this issue after city-appointed attorneys sent them instructions to ensure arrear payments for rates and services were made before transfers were done.
South Africa's Gini co-efficient a cause for concern
Rawson - South Africa
One of the results of being involved in the development and marketing of housing in South Africa, says Bill Rawson, Chairman of the Rawson Property Group, is that one becomes aware that certain poverty levels are so high that people’s lives become almost intolerable and their dissatisfaction can become dangerous.
The latest Gini co-efficient from the World Bank indicates clearly, says Rawson, that South Africa is now vulnerable as a result of a growing feeling that the income inequalities here are far too high.
The Gini co-efficient measures the extent of inequalities in income and lifestyle in most of the countries of the world in a scale of zero to one. A fairly affluent, but not radically unequal country like the UK will, therefore, have a Gini rating of 0,38. It is generally accepted by economists, added Rawson, that once the Gini rises above 0,4% trouble will ensue because the have-nots begin to resent their lack of wealth and second class status – Britain, therefore, with its 0, 38 rating, may be not far off a situation in which rising resentment at the lower end of the income scale could result in calls for higher taxation of the rich, increased welfare hand-outs and other socialist initiatives which in the long term will inevitably restrict growth.
House price indices - July 2015
Absa - South Africa
Continued slowdown in house price growth
The declining trend in year-on-year growth in the average nominal value of homes in the various categories of middle-segment housing in the South African residential property market continued in July this year. Average month-on-month price growth has slowed down to below 0,2% in July, contributing to declining annual price growth. Real price growth, i.e. after adjustment for the effect of inflation, also tapered off in June on the back of steadily rising consumer price inflation, with some real year-on-year price deflation evident in some categories of middle-segment housing. The average level of house prices was in June down by 11,2% in real terms compared with the peak in August 2007.
The average nominal value of homes in each of the middle-segment categories was as follows in July 2015:
- Small homes (80m²-140m²): R844 000
- Medium-sized homes (141m²-220 m²): R1 210 000
- Large homes (221m²-400m²): R1 877 000
The abovementioned trends in home values are according to the Absa house price indices, which are based on applications for mortgage finance received and approved by the bank in respect of middle-segment small, medium-sized and large homes (see explanatory notes).
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