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Property Talk

Property Talk

Author: Andreas Wassenaar
Date: 2016-09-16
StatsSA delivered an expected surprise to South Africans last week when it published the GDP growth rates for the second quarter of 2016. If you remember the shocking growth rate figures for the first quarter, published earlier this year, which amounted to a contraction of 1,2%. A recession is technically defined as two consecutive quarters of negative GDP growth rates. South Africa was therefore at risk of spiraling down into a recession. These fears were diminished when it was announced that the South African economy grew at an annualized 3,3 percent on quarter in the three months to June 2016. It is the highest growth rate since the fourth quarter of 2014. It was as if the entire country breathed a collective sign of relief. The breakdown by sector of the StatsSA GDP growth rate figures indicates that the resurgence in growth was driven largely by the Mining sector that grew by 11.8% following a 18.1% contraction in the first quarter. Manufacturing growth followed closely behind as a star performer with growth of 8.1% from a mere 0.6% growth rate recorded in the first quarter. The main drivers within these sectors were reported by the chief director for national accounts at StatsSA as being the exports of platinum and the exportation of motor vehicles. Although the quarter on quarter figures are more volatile from a statistical aspect, the annual GDP growth rate for the second quarter was recorded as 0.6% - small but still positive. Nedbank's prediction for the 2016 year is growth of 0.2% overall and expanding modestly to 1% in 2017. The International Monetary Fund are predicting 0.1% growth for South Africa for 2016. FNB's Residential Market Activity Indicator is now showing 5 consecutive quarters of year-on-year decline. This declining trend provides support for the view that the balance of 2016 is unlikely to support further strong GDP growth rates. Nevertheless we have avoided a recession at this stage and that is a reason to be happy. It is interesting to note that national average time a property remains on the market is 14 weeks (3rd Quarter2016) which is up from the 2nd Quarter at 13,6 weeks and the 1st Quarter at 11.1weeks. The percentage of Sellers dropping their asking price to achieve a sale is currently at 88% - a relatively stable measurement over the past few years. The average percentage drop in asking price recorded in the 3rd Quarter is 7%, down slightly from the 9% in the prior quarter and 8% previously.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com