August House Price Indices
Absa - South Africa
Steady house price growth continues
Real GDP growth of 0,6% quarter-on-quarter (q/q) was registered in the second quarter of 2014, after a contraction of 0,6% q/q in the first quarter of the year. As a result, an economic recession was thus technically averted. However, real year-on-year GDP growth slowed down further to 1% in the second quarter of the year, from 1,6% in the first quarter and 2% in the fourth quarter of last year. The forecast is for the economy to grow by a real 1,5% in 2014, with the risk for growth still to the downside.
Headline consumer price inflation remains above the 6% level and averaged 6,2% y/y in the first seven months of the year. Inflation is forecast at 6,3% in 2014 and 5,7% in 2015, with the main risks to the outlook being the exchange rate, food inflation, transport costs, property running costs and wage hikes.
The above mentioned trends in economic activity and inflation pose a risk of stagflation, as economic growth and domestic demand are trending down, whereas inflation remains under upward pressure. Interest rates are expected to rise further towards the end of the year and in 2015 to curb inflation, which may have a dampening effect on economic activity.
Many consumers continue to experience financial pressure on the back of low levels of employment, declining real income growth, low savings, impaired credit records, relatively high inflation and a rising trend in interest rates. Together with consumer confidence, these factors are expected to be reflected in property demand, property price trends and demand for mortgage finance in the remainder of the year and in 2015.
Absa HPI Aug 2014
Residential Property Indices
Lightstone - South Africa
Residential house prices in SA grew by 7.45% over the 12 months ended August 2014 according to the Lightstone inflation indices. This growth is broadly similar across the different provinces and wealth segments with the exception of very low valued properties that continue to grow at around 13.83%.
The recent rating agencies downgrade of four of our big home loan lending banks may, however, dampen this buoyant growth. The downgrade will affect the banks?cost of funding and subsequently their price offerings and willingness to lend. And we have seen over the last few years that the strong growth in house price inflation has been strongly correlated with an increase in levels of mortgage lending. It may be some time, though, before we see the effect of this trickle through to the market.
Absa HPI Aug 2014
When is a property deposit refundable?
IolProperty - South Africa
Under South African common law the general rule that applies when an agreement fails is that the parties must restore the status to the position they were in before the agreement was signed, unless both parties have agreed that there is an exception to this rule. When there is a sale of a property involved and the buyer puts down a deposit but is seen to have defaulted on the agreement, the seller can cancel and keep the deposit, says Lanice Steward, managing director of Knight Frank Residential SA.
But what does this mean to the buyer and why would he pay a deposit?
Usually the payment of a deposit is advisable when a purchaser wishes to show his good intent and commitment to the purchase of the property. In the majority of cases the buyer is required to get finance and in most contracts there is a 20 to 30 day provision made so that the buyer can apply for a bond (and this time frame should be enough). The seller would have to take his home off the market for this period so it only seems fair that the buyer commit in some way, hence the deposit payment, she said.