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Housing
reflected
in banks’
risk appetites
and lending cri-
teria, impacting the
access to credit and
growth in household con-
sumption expenditure
against the background
of a continued low level
of savings.
Consumer financial
vulnerability, as mea-
sured by the Bureau of
Market Research (BMR),
deteriorated in the sec-
ond quarter of 2015
compared with the first
quarter. At an overall
Consumer Financial Vulnerability
Index (CFVI) reading of 50,8 in the
second quarter (52,7 in the preced-
ing quarter), consumers remained
financially mildly exposed.
An overall and/or sub-index read-
ing of 40 - 49,9 in consumer financial
vulnerability indicates that consum-
ers are financially very exposed, with
an index reading of 50 - 59,9 indicat-
ing that consumers are financially
mildly exposed, whereas an index
reading of 60 - 79,9 indicates that
consumers are financially secure.
Overview
Based on statistics supplied by Light-
stone, there were more than 6,1 mil-
lion residential properties in South
Africa with a total value of R4,16
trillion in the second quarter of 2015.
Of themore than 6,1million prop-
erties, about 2,18million (35,5%) with
a total value of R2,29 trillion were
bonded and 3,96million (64,5%) with
a total value of R1,87 trillion were
non-bonded.
The General Household Survey
2014, published by Statistics South
Africa in June this year, provided
some insight into housing conditions
in the country in 2014:
•
79,4% of a total of 15,602 million
households were living in formal
housing. Formal housing refers
to structures built according to
approved architectural plans, i.e.
houses on separate stands, flats,
apartments, townhouses and
rooms and flats in backyards.
•
12,9% of households were living in
informal housing. Informal housing
refers to make shift structures not
erected according to approved ar-
chitectural plans, e.g. shacks in in-
formal settlements andbackyards.
•
55,3% of households living in
formal housing, fully owned their
properties, with 10,6% partially
owning their properties (financed
by and not yet fully paid off to
financial institutions) and 21,7%
renting the properties they were
living in.
•
15,3%of households were living in
RDP or state subsidised housing.
Levels of residential building activity
improved in the first eight months of
2015 compared with a year ago, but
growth remained well in the single
digits over this period. In the planning
phase, as reflected by the number of
building plans approved, as well as in
the construction phase, i.e. housing
reported as being completed, activity
remained largely subdued along the
lines of the past six years against the
background of economic, household
finance and confidence factors. Over
this period these levels of building
activitywerewell below those of 2005
- 2007, when the economy and real
household disposable income were
growing strongly and interest rates
were relatively low.
The number of new housing units for
which building plans were approved
was up by 6,8% y/y to more than
41 000 units in the period January to
August this year. This was the net re-
sult of growth of 10,1%y/y in the seg-
ments of houses less than 80m² and
flats and townhouses, whereas the
segment for houses larger than 80m²
showed a small decline of around 1%
y/y in the eight-month period.
The number of new housing units
constructed increased by 7% y/y to
more than 25 200 units in the first
eight months of the year, which was
largely driven by the two categories
of houses, which recorded combined
growth of 14,5%y/y to an overall total
of more than 18 000 units. However,
the segment of flats and townhouses
registered a contraction of 8,1%y/y to
about 7 200 units built in January to
August from almost 7 900 units built
in the corresponding period last year.
It should, however, be kept in mind
that there is normally a significant
time lag between the planning phase
and eventual completion of large
housing projects.
Building Confidence
Building confidence, based on the
BER’s building confidence index,
declined for the third consecutive
quarter in the third quarter of 2015,
to a level of 44 index points from a
recent high of 60 in the fourth quarter
of 2014. With an index reading of 50
representing confidence neutrality,
the majority of survey respondents
indicated that business conditions
in the building sector were unfavour-
able in the third quarter. This decline
in building confidence was mainly
driven by markedly lower levels of
confidence in the sectors of building
material manufacturers and retailers.
The building confidence index mea-
sures prevailing business conditions
in the building industry sub-sectors
of architects, quantity surveyors,
main building contractors, sub-con-
tractors, manufacturers of building
materials and retailers of building
materials and hardware.
The variable mortgage base inter-
est rate is 9,5%per annumafter being
December 2015
Continued
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