News24
10 Sep 2019, 11:44 GMT+10
After weak house price growth in the first half of 2019, there are signs that the prices may be stabilising, FNB has said, in a new analysis of the residential property market.
A number of factors are supporting prices:
Demand is improving
Improvements in demand can be attributed to some easing in buyer despondency following the elections, the increased bargain hunting given the attractive pricing, more competition between lenders as well as lower interest rates, says FNB.
This is reflected in the steady growth in mortgage extension, which has averaged 4.3% in the year to date, compared to 3.4% in the same period last year.
In fact, for the first time since June 2011, mortgage advances have been growing faster than the average house price growth in South Africa since the beginning of the year.
"Except for the brief period in the beginning of 2018 ('Ramaphoria'), we have not seen mortgage lending outpacing house prices since June 2011," FNB said in a release.
This has contributed to a 0.9% increase in transaction volumes this year, compared to 2018.
Supply is slowing
The FNB Market Strength indices show a "persistently slowing pace" in properties put on the market.
"The slowing pace of supply is driven by sellers withdrawing their properties, amid tough selling conditions, as it is becoming increasingly difficult to attain asking prices. This is countered somewhat by the surge in the supply of new stock (particularly flats and townhouses), as well as the rising emigration-related sales," FNB says.
Fewer properties in the market, combined with stronger demand, should push prices higher.
Interest rates
FNB expects that the SA Reserve Bank will cut rates by another 25 basis points before the end of the year, which should lend support.
Outlook
FNB expects that house prices will increase by 3.5% this year, and by 4% next year.
The eThekwini metro continues to overperform, supported by new developments in the North Coast regions, as well as renewed interest in the city centre, says FNB. In the inland regions, Ekurhuleni appears to have bucked the generally slowing price trend at a national level, while Johannesburg and Tshwane remain in the low single-digit territory.
However, Tshwane properties remain in the market for the shortest periods before they are sold:
Get a daily dose of Australian Herald news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Australian Herald.
More InformationGAZA - Israel Air Force pilots have heavily bombarded Gaza this week, killing hundreds and severely wounding hundreds more. The...
DOHA, Qatar: Boeing secured its largest widebody aircraft deal this week, as Qatar Airways placed firm orders for 160 jets with options...
NEW YORK CITY, New York: Goldman Sachs has agreed to pay a US$1.45 million civil penalty to resolve allegations from the Financial...
WASHINGTON, D.C.: The largest firefighters' union in the United States is calling for federal antitrust authorities to investigate...
LOS ANGELES, California: One person died and 32 others were hurt when a tour bus and an SUV crashed on a freeway near Los Angeles over...
COLOMBO, Sri Lanka: A passenger bus carrying nearly 50 people skidded off a cliff in Sri Lanka's central highlands, killing 21 and...
STOCKHOLM, Sweden: Sweden plans to propose that the European Union join the Pacific Rim trading bloc, the CPTPP, aiming to create the...
New Delhi [India] May 18 (ANI): England seamer Lauren Filer will make her first appearance after the Women's Ashes Test against Australia...
Moscow [Russia], May 17 (ANI): A Russian court has sentenced Australian national Oscar Jenkins to 13 years in a maximum-security prison...
London [UK], May 17 (ANI): Marnus Labuschagne got off the wrong foot while trying to pursue his blueprint to find the rich vien of...
New Delhi [India], May 17 (ANI): All-rounder Roston Chase has been appointed as the new captain of the West Indies Test team, with...
(250517) -- IMOLA, May 17, 2025 (Xinhua) -- Pit crew of McLaren work on the car of Oscar Piastri of Australia during the second practice...