Top End of the Market Changes

Absa’s latest Property Trends Reports reveals that the average price of houses in the top end of the market has been rising and the improved economy is to blame. 

Real disposable income growth has been 4.7% per year since 2000 and 6.6% in 2006, according to Absa and John Loos of FNB says that 5% economic growth is driving strong growth in higher income purchasing power. 

More people with high levels of purchasing power mean higher demand.  The fall of interest rates after 1998 and then again after 2002, meant an improvement in the affordability of the luxury end and a huge surge in demand.   

Foreign Land Ownership

Agriculture and Land Affairs Minister Lulu Xingwana said that the government welcomes open debate on the issue of foreign land ownership and that this particularly applied to the question of whether or not proposed new regulations on land ownership should be put into effect retrospectively. 

She said: “We will be guided by the submissions and recommendations coming from South Africans in this regard and the matter is open to debate, but as we sit now we have a Constitution that we must respect, we have laws that we must respect.”

The minister was speaking at the release of a government-commissioned report and recommendations on the development of policy regarding land ownership by foreigners in South Africa.  The panel commissioned to do the report made 10 recommendations including the possible outright prohibition on foreign ownership of South African land.

Continue reading Comments (0) 18.09.2007. 09:58

Integration of the Housing Market a Necessity

Housing Minister Lidiwe Sisulu said that a single integrated housing market was “absolutely necessary” to normalise the South African housing market and link the second economy to the first economy.   

Sisulu said that the value of property in the second economy, mainly in black townships, had become excluded from the mainstream economy ant this had to change.  She also said that South Africa found itself with two different and unrelated property markets and it was in the country’s best interest to link them.

She argued that there was value, or “dead equity”, in the second economy and South Africa ignored this “at its peril”.  This equity, which excluded the so-called tribal areas, had in 2004 been estimated to be valued at R68,3-billion.  However, “the most recent estimates were around R600-billion, something which must not be trifled with”. 

Continue reading Comments (0) 18.09.2007. 09:23

Credit growth slows down

According to the Reserve Bank, private sector credit extension (PSCE) rose 23.13% in the year to July, down from 24.99% in June.  This slowdown is not enough to remove the pressure for higher interest rates fuelled by soaring inflation. 

This is a sign that steeper lending rates have already started to curb consumer borrowing.  Analysts say that the downtrend is likely to gather momentum in the months ahead, as more stringent lending rules introduced in June and the effect of six interest rate hikes since the middle of last year feed into the economy.   

Investec economist Annabel Bishop said that the risk for an additional interest rate hike is mounting due to the deterioration in July’s inflation outcomes.   

Continue reading Comments (0) 12.09.2007. 08:52

Bonds weaken

After disappointing consumer inflation data for July, South African bonds weakened by almost as much as 10 basis points last month.   

The key government R153 bond was at 9.190% from its previous close of 9.120%, while the short-term R196 was bid at 9.450% from its previous close of 9.375%.  The longer-term R157 bond was at 8.470% from its previous 8.415%.  The rand was bid at 7.2596 from its overnight close of 7.2946. 

A local bond trader stated that the CPI data was pretty bad which caused bonds to weaken by several points.  He also said that there is a limited supply in the market at the moment so they should come back a bit.

Continue reading Comments (0) 12.09.2007. 08:49

Mortgage loans not affected by New Credit Act

Mortgage lending showed no let-up in the latest credit growth statistics, and rose by R17.3bn last during July.  The new National Credit Act, which was introduced in June, requires banks to add more stringent criteria when giving loans.  But not even this could slow down approved mortgaged loans. 

Mortgage loans grew by R9.5bn a month in 2005, to R13.1bn last year, according to Kevin Lings, economist at Stanlib.  The average monthly increase has been R12.97bn for the first seven months of this year.   

Continue reading Comments (0) 12.09.2007. 08:44
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