Whatshot

2026
All
September
2025
All
November
All
2024
All
June
All
April
All
2023
All
March
All
2022
All
2021
All
2020
All
March
All
February
All
2019
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
May
All
April
All
March
All
February
All
2018
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
May
All
April
All
March
All
February
All
2017
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
May
All
April
All
March
All
February
All
January
All
2016
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
May
All
April
All
March
All
February
All
January
All
2015
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
May
All
DHS
April
All
March
All
February
All
January
All
2014
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
KZN
May
All
April
All
March
All
February
All
January
All
2013
All
December
All
November
All
October
All
September
All
August
All
July
All
June
All
May
All
April
All
March
All
February
All
January
All
2012
All
December
All
November
All
October
All
September
All
August
All
July
All

Property Talk

Property Talk

Author: Andreas Wessenaar
Date: 2019-10-11

Property Market Cycle

According to FNB's Forecast, our GDP growth is expected to average 0,3% year-on-year for 2019, this being down from 0,7% in 2018. This is such an important statistic for property professionals to watch, as, without economic growth, employment growth and disposable income do not improve.

Without people having more money, the general demand for properties cannot improve significantly. We may find marginal improvements in mortgage advances as we have experienced recently, and we may find some seasonal improvements in demand depending on where in the country you are based, but a wholesale improvement in overall demand for properties depends to a large extent on economic growth.

The greater Ballito area has experienced growth beyond the national average because of the semi-gration of people, from Gauteng mainly, to take advantage of the outstanding quality of life and amenities we have. Cape Town was the beneficiary of the bulk of this semi-gration for many years, but as prices sky-rocketed, many people started to look at better value destinations that still offered what they were looking for in terms of security and lifestyle.

With the demise of Tongaat-Hulett as the big player in the property development space in KZN, a range of upwardly mobile developers with deep pockets are quickly filling the gap. Most of these relative newcomers have the financial strength to weather the current storms and have taken long-term views on their investments along this coastline.

Our interest rates and inflation rate are at historic low levels and currently support an improvement in the property market cycle.

The FNB House Price Index improved marginally to 3,8% year-on-year in September, from 3,7% in August. Quarterly the third quarter averaged 3,7% which is up from 3,4% in the second quarter of 2019. Improvements in average prices are good signs of improving demand and tend to indicate that further improvements are likely.

We have seen that the lower end of the market has performed better than the higher end with the latter offering outstanding buying opportunities for discerning investors. Banks are proving more mortgage lending according to the SARB data, which shows growth of 4,9% year-on-year in August - the highest growth since November 2010.

When mortgage advances outpace the average house price growth, this boost transaction volumes and according to FNB this is most notable in the R700,000 to R3,5m price bracket. The loan to price ratios for mortgage advances has increased strongly over the past two years reaching 90,6% in 2nd quarter 2019 up from 88% in the 2nd quarter of 2017.

What is interesting about this, is that it is the highest average loan to price ratio in over a decade indicating that the banks are more willing now to finance a larger portion of the purchase price. Interestingly enough most of the growth of the loan to price ratio has been in the higher price bands.

The overall property market outlook is expecting a slow steady improvement supported by low and steady interest rates and improved lending. If we have positive political and economic news then some acceleration can be expected.