Property value growth remains afloat

Posted On Thursday, 11 August 2011 02:00 Published by eProp Commercial Property News
Rate this item
(0 votes)

The continuing low interest rate environment and slight increases in disposable income have sustained nominal property value growth

Jacques du ToitThis according to Jacques du Toit, a senior property analyst at Absa Home Loans.

The price growth is mild however and should not be taken as an indication of a drastic turnaround, he continued. The interest rate is not expected to contribute to a boost in growth, but the low level has certainly contributed to some sustainability.

Du Toit said that with the interest rates looking to stay steady until the end of the year, further growth is expected, but an overall direction shall only get clearer as the year goes on.

A slower trend has been projected on the basis of last year's cycle, where prices took a downturn towards the end of the year, he said.

An estate agent survey released by FNB on Thursday, found that agents serving 'lower income' areas were finding reason to be optimistic.

The report used the average time of homes on the market as a proxy to determine the supply-demand dynamic of the individual pricing segments.

The survey asked estate agents to place the areas that they serve into one of four categories, i.e. high net worth areas (average price = 2.68 million rand), upper income areas (average price = 1.8 million rand), middle income areas (average price = 1.21 million rand), and lower income areas (average price = 599,000 rand).

The report found that the higher up the income area ladder, the less optimistic agents surveyed became, with agents in the high net worth areas having been consistently the least optimistic through 2010 and the first half of 2011.

From the data the lower-priced end was seemingly benefiting from the downscaling trend that has emerged from increased financial pressure on consumers.

While the lower income segment experienced significant financial pressure selling as well, a substantially greater slice of the first time buyer market has given it support and offset a possible greater level of financial stress than the higher segments according to the survey.

The FNB report found that the average value of small homes (80 square metres -141 square metres) dropped by a nominal 4.1% year on year (y/y) in July 2011, with the pace of price deflation slowing down. The average price of a small home came to about 757,100 rand in July this year. In real terms the value of small houses dropped by 10.2% y/y in June (-10.3% y/y in May).

 

Last modified on Tuesday, 11 March 2014 13:09

Most Popular

GMI Property Group adds a New Mall to its Stable: Bronkhorstspruit Mall

Jul 21, 2022
GMI Properties Group announces the development of the much-anticipated Bronkhorstspruit…

Equites Property Fund and Mabel conclude B-BBEE transaction

Jul 21, 2022
Andrea Taverna-Turisan
The JSE listed specialist logistics property fund, Equites, today officially announced…

The growing take-away and fast food, and food delivery, culture

Jul 20, 2022
Restaurant and Take-Aways data for May 2022
Restaurant and Take-Aways data for May 2022 points to “solid but slowing” growth in…

The rapidly rising cost of living is reflecting in residential rentals

Jul 21, 2022
TPN Graph-Rental Demand
Demand for residential rental properties saw some recovery in the first quarter of 2022…

Despite hike, interest rate remains below pre-Covid levels, says Dr Andrew Golding

Jul 21, 2022
Dr Andrew Golding
With the inflation outlook deteriorating since the previous Monetary Policy Committee…

Please publish modules in offcanvas position.