Housing in Southern Africa February 2015

stock to the market at a significantly faster rate, and as such forecast 2015 square metres of residential completions to grow by 21,6%. Housing

in 2015 ‘The expectation of THEO SWANEPOEL: PROPERTY MARKET ANALYST FNB HOME LOANS 011-6320604 tswanepoel@fnb.co.za

9 327 001 SquareMetres Residential Buildings Completed - Square Metres

0 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000 8 000 000 9 000 000 10 000 000

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

Residential Demand Rating (Scale 0 to 100)

Forecast

5 642 231

stronger real household disposable income growth in 2015, compared with 2014, leads to a forecast The information in this publication is derived from sources which are regarded as accurate and reliable, is of a general nature only, does not constitute advice and may not be applicable to all circumstances. Detailed advice should be obta ned in individual cases. No responsibility for any error, omission or loss sustained by any person acting or refraining from acting as a result of this publication is accepted by Firstrand Group Limited and / or the authors of the material. g owth to perhaps be slower than in 2014 should the SARB indeed persist with interest rate normalisation. The reasoning behind a slower rate of growth in demand is the expectation of a mild deterioration in residential affordability as our average house price growth forecast moves up a notch from 7,2% in 2014 to 8,7% for 2015. We expect to exceed average employee remuneration forecast at a lowly 5,3% for 2015.” There are two relevant affordabili- tymeasures - the first is the average house price/average employee remuneration index, and - the second measure is the instalment of further increase in residential demand.’ First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Services provider. Reg No. 1929/001225/06

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SquareMetres of Residential BuildingsCompleted FNB Valuers' Residential Demand Rating

BETTER ECONOMIC AND HOUSEHOLD INCOME GROWTH PROJECTED FOR 2015 The general mood in the residential property industry is a generally positive one, and so it should be. The market is far from booming, but has shown a nice solid performance over the past 3 years since 2012. Rising demand has gradually mopped up “excess supply, and a noticeably increasing percentage continuing a steadily rising trend, while third quarter 2014 m² of residen- tial building plans passed surged to 19,2% some, to give some perspective, this would still imply that 2015 building completion levels would be -39.5% below the boom time peak year of 2007, and after some years of very low levels of building activity, we finally believe that the time has come for more me ningful growth.”

He concludes, “Although we fore- cast further strengthening in certain other residential property numbers, including a mild increase in house price inflation, a further shortening of the average time of homes on the market, and a further rise the FNB Market Strength Index, we believe that the highlight of 2015 will prove to be a notable strengthening in the level of newly built residential units coming onto themarket. This, in turn, is forecast to lead to some easing in residential supply constraints come 2016, resulting in slowing annual house price growth as we move into 2016 and beyond.” ■

payment value on a new 100% bond on the average priced house/average e m p l o y e e remunera- tion ra-

year-on-year

growth. L o o s s a y s , “While this growth may sound extreme to

tio index. Both of these affordability measures began to show some dete- rioration in 2014. The former Index is forecast to rise 3,3% in 2015, while the latter is projected to rise at a faster 7,3% based on house price, employee remuneration and interest rate forecasts. The FNB-BER Residential Con- tractors Building Confidence In- dex jumped from 58 to 69 (Scale of 0 to 100) in the final quarter,

February 2015