The South African residential property market has enjoyed
incredible growth over the last few years, toping The Economist’s
international property poll for largest increases in property
prices on a number of occasions. This has taken place against
a backdrop of strong economic growth and demand, a weaker
rand, and a normalisation of the property market in comparison
to other countries around the world.
As you would expect in any market, some sections experience
different growth cycles at different times and it can be misleading
to judge the market as a whole entity. This is what we find
happening in South Africa at the moment, with growth slowing
significantly in some areas and segments of the market whilst
remaining strong in others.
In this section of the website, we will bring you a sample
of articles about the current state of the South African property
market. We hope you find them of interest.
“South
African residential property prices were "still
flying" compared with international markets,
Ed Grondel, the chief executive of FNB Homeloans,
said yesterday.
Grondel said house prices in South Africa in June this
year showed year-on-year growth of 13.8 percent compared
with 9.4 percent in the US, 5.2 percent in the UK and
3.7 percent in Australia.
It had taken only four years for property prices in
South Africa to double compared with eight years in
Australia and six and a half years in the UK.
He said this strong growth meant South African property
prices had "caught up with the rest of the world
and we're in a very active environment".
The residential development market in South Africa was
"extremely active" despite a significant slowdown
in the R1.5 million and above premium segment of this
market.
Based on a survey of the 15 major residential developers
in Gauteng, the greatest activity and demand was in
the R300 000 to R700 000 price category.
The survey indicated that the middle to lower end of
the market recorded an activity level 9 on a 10-point
scale and developers expected "an increased boom
ahead of 2010".
This buoyancy in the development market was attributed
to a demand for security and secure complexes, the housing
shortage, the emerging black market and the normalisation
of property prices.
Grondel said developers did not anticipate the housing
market bubble to burst despite the recent interest rate
increases.
Turning to FNB's residential property barometer, Grondel
said the two recent interest rate increases had led
to this confidence indicator dropping to "its lowest
level ever".
But, at 5.5 on a 10-point scale, overall confidence
in the market was stable and still showing positive
growth despite the very active and active portions of
the market declining substantially since the interest
rate hikes, he said.
"There has been an overall slowdown in activity
levels during 2006 and the interest rate increases have
had an immediate impact on market activity and sentiment."
The barometer is based the views and sentiments of 150
estate agents countrywide.
Grondel said the number of first-time buyers in the
market had declined to 20 percent in the second quarter
of this year from 32 percent in the same period last
year.
"If first-time buyers disappear from the market,
this is a big sign that market growth is really slowing
down."
One of the trends to emerge from the research was that
74 percent of sellers were not getting their asking
price after the recent interest rate increases, compared
with only 58 percent in second quarter this year and
29 percent in the first quarter of last year.
Other headline trends were that the time a property
remained on the market before being sold had increased
from eight weeks in the second quarter of this year
to nine weeks and six days in July and August this year;
the buy-to-let market had improved slightly; and estate
agents were not as upbeat about the outlook for the
market in the third quarter of this year because of
uncertainty over the interest rate environment and the
affordability of housing.” |
| * Source: Business Report; Roy Cokayne; 23 August 2006 |
|
