Transport corridors present the 'next big property opportunities'
Iol.co.za - South Africa
The next big opportunity in the property market would be along the transport corridors within cities and that linked cities rather than in circular nodes, said Francois Viruly, a property consultant and professor at the School of Construction Economics and Management at UCT.
This was already evident along all the transport nodes in all the metropolitan areas in South Africa, such as around the Gautrain, he told an SA Property Owners' Association broker's forum last week.
Viruly said new cities would develop in South Africa and with urbanisation there would be an additional 10 million people in Johannesburg, which would lead to an increased need for high density housing.
"This means the residential property market will start competing with the commercial property market for space. There will be many more opportunities, especially on the outskirts of the central business districts, and double storey shacks because land will become more valuable as property prices increase."
FNB Property Barometer - September house price index
FNB - South Africa
House prices starting to lose growth momentum as “Summer 2010/11 Stimulus” wears thinner
SUMMARY – HOUSE PRICE GROWTH STARTING TO LOSE STEAM?
Following a trend of mild acceleration since early-2011, the year-on-year growth rate in the FNB House Price Index for September “stalled” on 5.6%, unchanged from the revised 5.6% rate for August.
This stalling can partly be ascribed to rising base effects, with the bout of month-on-month house price decline around mid-2010 being at its worst around August last year, and thereafter starting to dissipate.
However, it is believed that economic factors are also beginning to play a role in constraining house price growth, with the interest rate cutting stimulus of late-2010 wearing thin, and economic growth having slowed in the 2nd quarter to begin placing pressure on real household disposable income growth. Much of the domestic economic growth slowdown in turn can be explained by a global economic growth slowdown.
In real terms, adjusting house price growth for consumer price inflation, August saw a very slight +0.3% positive year-on-year growth rate after 9 consecutive months of year-on-year decline, with year-on-year house price inflation outstripping consumer price inflation.
FNB Property Barometer_September 2011 House Price Index
FNB Property Barometer - 3rd Quarter Provincial House Price Indices
FNB - South Africa
More cyclicality in major coastal provinces than inland, it would appear, but coastal provinces have made something of a comeback.
As a group, the 5 minor, predominantly inland, provinces and Gauteng appear more stable than the 3 major coastal provinces. This has implied that the inland provinces as a group didn’t appear to suffer quite the same
price decline during the 2008/9 recession, but did also not experience quite as impressive a “mini-recovery” as the coastal provinces. We believe that the average price recoveries made by KZN, the Eastern and Western Cape
ABSA September House Price Indices
ABSA - South Africa
Growth in home values remains relatively low
Trends in house prices remained mixed in the middle segment of the South African housing market, based on the Absa house price indices for small, medium-sized and large house for which the bank approved mortgage finance (see explanatory notes). In two of the segments trends in price growth appear to be improving, while in the third segment price growth continues to slow down.
Nominal year-on-year house price growth improved further in the medium-sized category in September 2011, with price deflation still slowing down in the small segment. In the category for large houses, price growth has been on a declining trend since May last year, which is indicative of the market for these type of properties feeling the effect of economic trends, the state of household finances and lower consumer confidence. Month-on-month price trends remained subdued in all three segments of housing in September.
In real terms, i.e. after adjustment for inflation, annual price deflation continued across the board in all three categories of housing up to August this year, impacted by rising by headline consumer price inflation, which was recorded at 5,3% year-on-year (y/y) in August.
Pam Golding Residential Property Outlook
Pam Golding - South Africa
The rand is the key
While not unexpected, the residential property market was disappointed by the SA Reserve Bank’s decision to hold interest rates at present levels. But there is still the chance of a cut in November, which should help boost sales.
A weakening rand and worrying tendencies in the United States and Europe put paid to hopes of an interest rate cut by the SA Reserve Bank – a cut which had been widely anticipated as a boost to the country’s sluggish economy.
At its September meeting the bank’s Monetary Policy Committee decided, for the fifth consecutive time, to keep interest rates on hold. Although Governor Gill Marcus stressed that the decision had been unanimous, she disclosed that one member of the committee had been strongly for a cut. Furthermore, she left the door open for the possibility of a rate cut at the next committee gathering in November.
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