Rising sales volumes confirm market upturn


The SA residential property market is now clearly emerging from the slump, with the latest available Deeds Office stats showing a steady monthly increase in the number of home transfers being registered since August last year (see graph).

And in fact it would seem that homebuyers and investors have even more faith in the market than these figures would imply, says Jan Davel, COO and director of the RealNet estate agency group.

“The latest analysis by FNB reveals that new mortgage lending in the 3rd quarter of last year was still only at 23% of the peak reached in the third quarter of 2007. In addition, the bank believes that although the total value of mortgage loans outstanding showed an uptick in January, this was due more to the fall in the rate of capital repayment on current loans than to a real increase in the number of new loans being granted.

“Alongside this, however, the number of houses being sold and transferred each month continues to grow – suggesting that there is a significant amount of cash purchasing going on which in turn indicates that investors have regained confidence in property and are once more channelling money into bricks and mortar.”

Another statistic that supports this view is the fall in the value of savings deposits being made into the banks. Reserve Bank figures show that year-on-year growth in deposits fell to 4,3% in December from 6,5% in the third quarter, and while many households are still using any additional disposable income to reduce debt rather than save, Davel says a significant number of others are applying the extra money to property, where they believe they can get better returns than the low interest rates currently offered on savings accounts.  

“Indeed, we believe that the only thing really putting the brakes on the residential property market at the moment is the fact that the banks have restricted funds for investment and are putting the bulk of these into what they view as more lucrative sectors and portfolios.”

Meanwhile, investors who have taken the plunge back into property or are thinking of doing so soon should take heart from a recent report in the authoritative Economist magazine, which rated SA’s housing market by far the best in the world over the longer term.

The magazine's global house price index shows that SA house prices have risen by a cumulative 418% over the past 12 years (1997 to 2009), with the next best performers being Australia (181%), the UK (175%) and Spain (167%).

”The Economist also noted that SA is one of only a few countries in the world where house prices are already back to or beyond their 2008 peaks,” says Davel, “and this is confirmed by the latest FNB House Price Index which shows that the price of the average SA house accelerated to R770 332 in February, putting it well ahead of the R755 390 recorded at the height of the boom in 2008.”

Issued by RealNet
For further information call
Jan Davel on
012 460 4605 or visit

www.realnet.co.za


Article by: RealNet