SA property price rise eases

The South African residential property market continues to be buoyant, although the growth in house prices has eased substantially from last year’s peak, Standard Bank economists Elna Moolman and Gina Schoeman said in the latest residential property gauge.

“This deceleration is most evident in the upper price range, while activity and prices of properties in the middle price ranges are still outpacing the growth in other price bands,” they said.

The economists noted that the macroeconomic environment and consumers’ relatively sound balance sheets remain supportive of a firm housing market.

They said the anticipated consolidation in house prices has started to take place with the slowdown in property prices echoed by anecdotal evidence which suggests an increase in the average number of days that a property is on the market before being sold, and a rising gap between asking and selling prices.

“This is the result of recent above-trend growth that created a high base from where future growth rates will be calculated; the reduction in pent-up demand after several years of brisk buying; and the fading impact of previous interest rate cuts,” they said.


The economists found that even though growth in house prices across the board are slowing down, there are noticeable differences in the various price segments.

Prior to 2003, luxury houses’ prices generally outpaced those of less expensive houses, while the least expensive houses generally grew the slowest. This is important from an affordability point of view, especially for the less affluent, whose cost of housing has increased less than proportionately most of the time.

More recently, faster growth has been recorded in the middle price ranges than among the most expensive houses.

This phenomenon is attributable to two factors. Firstly, increasing property prices have been stimulating the demand for more affordable property, with townhouses and flats gaining popularity relative to houses.

According to Statistics South Africa, the number of houses completed this year was almost 20% lower than in the corresponding period last year, while the number of townhouses and flats completed has grown by 68% in the year to date.

While this reflects a rising supply of townhouses and flats, the continuous price growth in this segment implies that the demand for this type of accommodation still exceeds supply.

Secondly, the relative performance of different house price segments concurs with the dynamics in different income groups.

The favourable macroeconomic environment and national redistributive policies are underpinning an upward income migration of the population, with a rising proportion entering the middle-income groups from the low-income group.

The proportion of the population that falls in the highest income group remains more or less constant, and amid a growing total population, this implies that the number of people in this group increased.

The rising proportion of the population (and number of people) in the middle-income groups boosted demand for middle-priced properties, while the stagnant proportion of high-income earners explains why rises in the most expensive houses were less buoyant than in middle-priced houses.

The relatively low inflation in the cheapest houses is at least partly attributable to the shallowness of a secondary market for houses in this price segment. – I-Net Bridge

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Mandela steals Zuma’s coronation

Nelson Mandela on Sunday proved he is still the giant of African politics when he made a surprise appearance at the ANC's final campaign rally.

SA February PPI seen steady at 5,5% y/y

South Africa's February 2005 producer price index (PPI) is expected to remain at January's 5,5% year-on-year (y/y) increase. According to an I-Net Bridge survey of economists, the range is from 4,9% y/y to 5,9% y/y. The optimists expect the stronger rand to have kept factory gate prices subdued, while the pessimists believe rising oil and other commodity prices will lead to higher producer prices.

SA nuclear firm awards design contract

The Pebble Bed Modular Reactor's (PBMR) fuel division announced on Wednesday that it had awarded a design contract worth R10,5-million to a South African design house, Thermtron Projects, in a crucial second step in the PBMR fuel manufacturing technology, to prove sustainability on an industrial scale.

Petrol price: Good news may be in store

The Department of Minerals and Energy could implement a retail petrol price cut of about 15 cents per litre (c/l) on March 1, given recent trends in both the rand exchange rate and oil prices, reversing the 14c/l increase implemented this month. The retail petrol price is adjusted monthly on the first Wednesday of the month.

Manuel tables conservative Budget

South African Finance Minister Trevor Manuel on Wednesday tabled a conservative Budget, eschewing corporate and individual income tax rate cuts, even though the revenue over-run in the 2005/06 fiscal year is projected at R41-billion. Compared with last year's Budget, when the fiscal deficit to gross domestic product ratio was forecast to remain near 3% over the medium term, Manuel this year reduced that to the 1,5% level.

Petrol price could drop by 12 cents a litre

The Department of Minerals and Energy could implement a retail petrol-price cut of about 12 cents per litre (c/l) on March 1, given recent trends in both the rand exchange rate and oil prices. The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period's over- or under-recovery.
Advertising

Subscribers only

The shame of 40 000 missing education certificates

Graduates are being left in the lurch by a higher education department that is simply unable to deliver the crucial certificates proving their qualifications - in some cases dating back to 1992

The living nightmare of environmental activists who protest mine expansion

Last week Fikile Ntshangase was gunned down as activists fight mining company Tendele’s expansions. Community members tell the M&G about the ‘kill lists’ and the dread they live with every day

More top stories

Fifteen witnesses for vice-chancellor probe

Sefako Makgatho University vice-chancellor Professor Peter Mbati had interdicted parliament last month from continuing with the inquiry

Constitutional Court ruling on restructuring dispute is good for employers

A judgment from the apex court empowers employers to change their workers’ contracts — without consultation

Audi Q8: Perfectly cool

The Audi Q8 is designed to be the king in the elite SUV class. But is it a victim of its own success?

KZN officials cash in on ‘danger pay for Covid-19’

Leadership failures at Umdoni local municipality in KwaZulu-Natal have caused a ‘very unhappy’ ANC PEC to fire the mayor and chief whip
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday