From the Desk of the MD - December 2018
Category From the Desk of the MD
And so we come - gratefully - to the end of another year that has tested the resilience of all SA consumers, and start looking forward to some well-deserved leisure time with our loved ones.
However, I think it must be said that we are ending on a remarkably positive note, especially in the real estate sector.
Stats show, for example, that our market has gained about 77 000 new homeowners a year since 2015 (see below), but that over the same period, private sector developers and builders working in municipal areas managed to deliver less than 30 000 new homes a year to meet this demand.
The dual effect of this has been to underpin the demand for existing or pre-owned homes, and to drive the continued upward movement of prices, albeit slowly, as the amount of stock for sale steadily declines.
Indeed, the latest figures from BetterBond show that the average SA home price in the year to end-October was R1,16m, compared to R1,12m in the previous 12 months, and that the average price paid by first-time buyers over the past year was R850 000, or 9,65% more than the average of R775 000 in the previous 12 months.
In addition, the total value of household mortgages is currently growing by around 4% a year.
Meanwhile, the Absa homeowner sentiment index, which reflects the percentage of survey respondents with positive sentiment regarding property market conditions, remained at a very respectable 72% in the third quarter of the year, although it was down from 73% in the second quarter due to consumer concerns about the question of land expropriation without compensation, the economy being in a recession in the second quarter, and continued political uncertainties.
Even more encouraging is that 75% of survey respondents were positive about property investment, and that 67% remained positive about the benefits of buying a home rather than renting one, thanks mainly to views that property remains a good investment as values are continuing to rise, and that there are good buying opportunities in the current market while price growth is still relatively constrained.
In keeping with this upbeat mood, developers have clearly taken the view that property demand will continue to expand. The number of residential building plans passed in the first nine months of this year was 8,3% up on the same period of 2017, while the value of plans passed rose 5,9%.
And this will lead to some R43bn being poured into the property market as these plans come to fruition over the next 18 to 24 months - a prospect which I'm sure even the most bullish commentators will agree is pretty cheery.
For now though, we would like to wish all our RealNet families, friends and prospective buyers and sellers a very relaxed and peaceful holiday season, and a very happy and prosperous new year. See you all in 2019!
Author: Gerhard Kotze
