Housing in Southern Africa July 2016

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Housing
Real price trends are important
from a property investment
perspective, as investors want
to determine that their investments
beat inflation. Trends in home values
are according to Absa’s house price
indices.
According to Jacques du Toit, Absa
Home Loans, Property Analyst, year-
on-year nominal price growth of 5,7%
recorded inmiddle-segment housing
in May was slightly down from 6,1%
in April. Year-to-date price growth till
May was 6%.
Current trends in house prices
are as a result of financial pressure
Low house price growth
May 2016 saw year-on-year
growth in the average nominal
value of middle-segment homes
in the South African residential
property market, slowing down
from April.
experienced by homebuyers on
the back of tough macroeconomic
conditions.
The average nominal value of
homes in each of the middle-
segment categories was as fol-
lows in May 2016:
• Small homes 80 m² - 40m²
averages R947 000
• Medium-sized homes 141 m² -
220 m² averages R1 282 000
• Large homes 221 m² - 400 m²
averages R2 010 000
Current trends and prospects for the
economy in the household sector will
impact the performance of the resi-
dential propertymarket and property
price growth.
The economy contracted by 1,2%
quarter-on-quarter and 0,2% y/y,
measured by production, in the first
three months of 2016. This has in-
creased the risk of a recession, after
two consecutive quarters of a con-
traction in gross domestic product.
Continued inflationary pressures and
higher interest rates towards year-
end will further erode consumers’
purchasing power. This will result in
low consumer confidence and sub-
dued growth in consumption expen-
diture and credit extension. Against
this background consumer credit-risk
profiles and financial vulnerability,
credit providers’ risk appetites and
lending criteria may change. ■