FNB Property Barometer - Segment Price and Market Strength Review
FNB - South Africa
At present, one can’t ignore the reality of a world economy under increasing pressure, and the potential impact that it can have on an already-mediocre South African economy. This is expected to slow household disposable income
growth, and thus home purchasing power. As a result, we anticipate a virtually unchanged national average house price in 2012 compared with the average price for 2011.
The relative segment price performances, as outlined above, continue to point to an “affordability and basics” focus by home buyers in general. It comes as little surprise to see a continuation of this trend, and weaker global and domestic economic times ahead would point to more of the same going forward. We would thus expect the smaller-sized, more affordable segments to moderately outperform the higher priced segments through the remainder of 2011 and through 2012. Primary residential demand-driven markets also look set to continue to outperform markets driven more by non-essential forms of buying such as holiday property buying.
ABSA House Price Indices - July 2011
ABSA - South Africa
Growth in home values improving further
Year-on-year (y/y) growth in home values in the middle segment of the South African housing market improved further in July 2011, while in real terms, price deflation continued up to June this year. This is based on the latest trends in the Absa house price indices for small, medium-sized and large homes for which the bank approved mortgage finance (see explanatory notes). Nominal house price growth accelerated in both the medium-sized and large categories of the market in July 2011, while price deflation was still evident in the small segment, impacted by the base affect of strong price growth a year ago. In real terms, i.e. after adjustment for the effect of inflation, prices in all three categories of housing declined further in June 2011 compared with a year ago. Real house price calculations are based on consumer price
inflation, which increased to 5% y/y in June, from 4,6% y/y in May this year.
Based on trends in home values up to July this year, and projections of steady economic growth, gradually rising inflation, stable interest rates, and continued growth in household disposable income, nominal house price growth of between 1% and 2% is expected for the full year. With consumer price inflation forecast to rise to around 6% y/y by year-end, house prices are set to decline in real terms this year, after rising by a real 3% in 2010.
ABSA House Price Indices July 2011
2nd Quarter Estate Agent Survey by Income/Price Segment
FNB - South Africa
Following the summer quarters, where the benefits of two late-2010 interest rate cuts were still being felt along with positive seasonal factors, the 2nd quarter Estate Agent Demand Ratings weakened across all 4 income segments. When examining the relative performances of the 4 income segments, it probably comes as little surprise in these tough financial times that the more affordable end of the market shows higher demand ratings by agents. Examining FNB’s estimates of price trends by area value bands, a broadly similar relative picture emerges, with the higher priced bands showing slower price growth than the value bands with average prices below R1m.
Property Owners - do not neglect to draw up a will
RealEstate Web - South Africa
The consequences of avoiding this could be dire. All people, but especially property owners, should realise that if they do not draw up a will, the time taken to wind up their estate when they die may well be lengthened significantly and considerable extra costs could be incurred by their heirs. Even more importantly, their wishes for their heirs may not be fulfilled. It is surprising how often we come across successful business and professional people with great experience of the world who nevertheless have neglected to make up-to-date provision for how they would like to allocate their assets after their death. This is, to say the least, not in the best interests of their heirs and even irresponsible. The big advantage of a will is that it removes the uncertainties. Where there is no will the Master of the High Court has to work according to statutory formulae set out in the Intestate Succession Act.
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