SA market still among the leaders

The Home TruthsAccording to the annual ‘Home Truths’ article recently published by The Economist, the rate of house price growth in SA is currently the third highest in the developed world at an average of 5%, with only Hong Kong (21,8%) and Austria (10,1%) doing better.

This may come as something of a surprise to those who have wondered just how much longer it will be before local property prices return to real-term growth, but The Economist’s figures also show that over the past five years (to end-2012), only six countries have experienced higher house price growth rates than SA.

These are Austria, Canada, China, Hong Kong, Singapore and Switzerland – and several of these, even China, are currently on a slower growth track than SA (see table).

The Economist points out that in Canada, for example, the annual rate of growth in the fourth quarter of last year was only 3,3%, compared with 7,1% a year earlier.

Meanwhile, although SA prices have only grown by 12,2% over the past five years, the local market still looks pretty good against the US, where prices have shown a 20,5% decline, not to mention Spain (-24,3%) and Ireland, where an utterly depressed market has seen property prices literally halve in the past five years.

And there is more good news for the SA market, too, in the latest Absa and FNB property publications.

The former shows that year-on-year housing price growth is now moving ahead of inflation in several areas (Port Elizabeth, East London and the KZN South Coast, for example) and in specific sectors in other areas, such as medium-sized housing in Mpumalanga, Limpopo and the Tshwane metro, and smaller housing in the North West and Northern Cape. Large homes in the Western Cape are also showing inflation-beating price gains.

And according to FNB’s latest survey of estate agents, the average listing time of properties declined to between 15 and 16 weeks, compared to almost 18 weeks in the first half of 2012. In addition, while 85% of property sellers still have to drop their price in order to sell, this drop has moderated from an average of 13% of asking price in 2011 to 10%.

Best of all, the survey showed that 13% of agents now regard stock constraints as a limiting factor when considering near-term market prospects. This is double the 6,5% of agents who cited stock constraints in 2011 and indicates a broadly improved balance between supply and demand in the market which should, in turn, underpin continued house price growth.

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