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Property barometer - home buying by race
FNB - South Africa
The FNB Estate Agent Survey for the 1st 2 quarters of 2013 points to further progress in the racial transformation of South Africa’s “Suburban” housing markets. This should not come as surprise, given what StatsSA and other data has long been showing in terms of the steady racial transformation of the country’s labour market, and with it the narrowing of the income gap between race groups.

The estimated pick up in buying by previously-disadvantage population groups following a considerable period of better economic and interest rate times should not be surprising. Many people in these groups have less financial backing from older generations (than in the white group for instance), who themselves often come from a low income past. This emerging middle class is thus arguably more dependent on a favourable economic and interest rate cycle to boost current income and access to credit, as opposed to many older white group repeat buyers who have already built up significant wealth, including the value of the homes that they sell prior to repeat buying.

Therefore, boosting economic growth through boosting the skills development sector and developing growth-friendly policies should be seen as essential to housing market racial transformation. Stagnant economic growth periods have estate agents seemingly pointing to a slower rate of suburban housing market transformation.
Property_Barometer Race Group Home Buying_July 2013

Residential building statistics
Absa - South Africa
Slowdown in residential building activity in May

Levels of residential building activity, i.e. with regard to building plans approved for new housing and new housing units completed in the South African market, tapered off in May 2013, after a relatively strong performance in earlier months. However, activity levels were still up in the first five months of the year compared with the corresponding period last year.

Although the number of building plans approved for new housing increased by 11,3% year-onyear (y/y) in January to May this year, marginal growth of just 0,5% y/y was recorded in May. Plans were approved for a total of 4 658 new housing units in May, down by 435 units, or 8,5%, compared with April, driven by a sharp drop of 32,1% y/y in plans approved in the segment for houses less than 80m² to a total of 1 113 units. The category of flats and townhouses saw plans approved increasing by 32,1% y/y to 2 171 units in May.
Building stats May 2013

Great demand for 100% home loans, but banks resist
IolProperty - South Africa
Roughly 20% of all bond applicants in South Africa require 100% bonds today - but the rejection rate on this type of application is always a great deal higher than the average.

Some 85% of those applying for 100% bonds tend to buy in the R500,000 to R750,000 price bracket, says Mike van Alphen, National Manager of the Rawson Property Group's bond origination division, Rawson Finance. Those hoping to buy above R750,000 are often upgrading and can put down 10 or 15% deposits as a result of the sale of their current home.

'The banks are sometimes accused of being too harsh in their assessments of 100% bond applicants. However, in my experience this is not so - they are committed to helping in this sector but they have to work to the rules and standards set by the National Credit Act and there is no getting away from this.'
Building stats May 2013

Household sector July interest rate decision
FNB - South Africa
Unchanged interest rate decision probably means little further improvement in household debt-servicing performance, while also keeping the cumulative impact of monetary and fiscal policy on the household sector negative.
In summary, the implications of today’s unchanged interest rate decision are believed to be a further slowing in real household disposable income, as the effect of prior rate cuts wears thin, a more-or-less sideways movement in the household debt-todisposable income ratio, and no further meaningful improvement in household debt servicing (repayment) performance.

An unchanged decision also means that the combined fiscal and monetary policy impact on household sector finances remains negative, with the effective personal tax burden relative to income rising further in 2013.

The FNB view is that we are now in a lengthy period of stable and unchanged interest rates that is expected to last through the rest of 2013 and well beyond. With consumer price inflation near the upper target limit of 6%, the SARB has little room to move in the form of further interest rate cutting at present.
July Interest Rate Decision_Note

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