Home Loans SA - Bloghttp://www.homeloans-sa.com/blog/Copyright Home Loans SA - BlogsNewsAbsa’s latest Property Trends Reports reveals that the average price of houses in the top end of the market has been rising and the improved economy is to blame.  Real disposable income growth has been 4.7% per year since 2000 and 6.6% in 2006, according to Absa and John Loos of FNB says that 5% economic growth is driving strong growth in higher income purchasing power.  More people with high levels of purchasing power mean higher demand.  The fall of interest rates after 1998 and then again after 2002, meant an improvement in the affordability of the luxury end and a huge surge in demand.    The top end of the market has also felt the effects of decreasing affordability levels and the lower end of the market has attracted a lot more buyers than in the past.  The new National Credit Act will not have as big an effect on the luxury market as it does on the lower end of the market as most of the buyers in the top end of the market can afford to buy their property in cash.  According to Absa’s index the upper end of the market – priced between R2.7m and R9.9m - rose by 10.9% last year, which is up from 8.1% in 2005.  Early in 2007 Absa has reported that growth in the luxury end of the market has accelerated.  For as long as interest rates remain on their current rising trend, it is anticipated that the lower end of the market will be the best performer in the next few years.  Wed, 28 Nov 2007 10:37:21 +0000http://www.homeloans-sa.com/blog/property-news/top-end-of-the-market-changes-/http://www.homeloans-sa.com/blog/property-news/top-end-of-the-market-changes-/Agriculture and Land Affairs Minister Lulu Xingwana said that the government welcomes open debate on the issue of foreign land ownership and that this particularly applied to the question of whether or not proposed new regulations on land ownership should be put into effect retrospectively.  She said: “We will be guided by the submissions and recommendations coming from South Africans in this regard and the matter is open to debate, but as we sit now we have a Constitution that we must respect, we have laws that we must respect.” The minister was speaking at the release of a government-commissioned report and recommendations on the development of policy regarding land ownership by foreigners in South Africa.  The panel commissioned to do the report made 10 recommendations including the possible outright prohibition on foreign ownership of South African land. On the grounds of national interests, environmental considerations, areas of historical and cultural significance, and national security, the private ownership of land by foreigners and certain South Africans should be prohibited, the report said. The prohibited areas should include National Key Points, coastal areas, conservation areas, land close to military installations, water catchment areas and land along borders and international boundaries. Around three percent of residential, agricultural, farmland and sectional titles in South Africa is owned by foreigners.Tue, 18 Sep 2007 09:58:02 +0000http://www.homeloans-sa.com/blog/property-news/foreign-land-ownership-/http://www.homeloans-sa.com/blog/property-news/foreign-land-ownership-/Housing Minister Lidiwe Sisulu said that a single integrated housing market was “absolutely necessary” to normalise the South African housing market and link the second economy to the first economy.    Sisulu said that the value of property in the second economy, mainly in black townships, had become excluded from the mainstream economy ant this had to change.  She also said that South Africa found itself with two different and unrelated property markets and it was in the country’s best interest to link them. She argued that there was value, or “dead equity”, in the second economy and South Africa ignored this “at its peril”.  This equity, which excluded the so-called tribal areas, had in 2004 been estimated to be valued at R68,3-billion.  However, “the most recent estimates were around R600-billion, something which must not be trifled with”.  Sisulu feels that it makes sense to normalise the housing market, as there is a young and growing population, with half the population under the age of 25, which presented the country with serious challenges.  She also said that South Africa needed the creation of integrated communities in integrated human settlements to do away with the abnormalities of different communities living apart. Tue, 18 Sep 2007 09:23:18 +0000http://www.homeloans-sa.com/blog/property-news/integration-of-the-housing-market-a-necessity-/http://www.homeloans-sa.com/blog/property-news/integration-of-the-housing-market-a-necessity-/According to the Reserve Bank, private sector credit extension (PSCE) rose 23.13% in the year to July, down from 24.99% in June.  This slowdown is not enough to remove the pressure for higher interest rates fuelled by soaring inflation.  This is a sign that steeper lending rates have already started to curb consumer borrowing.  Analysts say that the downtrend is likely to gather momentum in the months ahead, as more stringent lending rules introduced in June and the effect of six interest rate hikes since the middle of last year feed into the economy.    Investec economist Annabel Bishop said that the risk for an additional interest rate hike is mounting due to the deterioration in July’s inflation outcomes.    The Bank has raised its key repo rate by three percentage points to 10% since June last year, bringing it to a four year peak.  Retail sales have started to slow, subsiding to 6.4% in the year to June from 9.2% the previous month.  New vehicle sales have fallen for four months in a row.  Dennis Dykes, Nedbank chief economist said that they had expected a bigger slowdown in the credit numbers given the higher interest rates and that this would support the case for further monetary tightening, which would be a mistake.  The data showed that annual growth in mortgage advances decreased slightly to 26,7% from 27,2% in June while the pace for instalment sales barely budged at 10,1% from 10%. The core measure of PSCE — which includes mortgages, leasing finance and instalment sales — slowed to 23% from 23,5%. This component makes up 62% of the PSCE basket and includes most household credit.Wed, 12 Sep 2007 08:52:46 +0000http://www.homeloans-sa.com/blog/home-loan-advice/credit-growth-slows-down-/http://www.homeloans-sa.com/blog/home-loan-advice/credit-growth-slows-down-/After disappointing consumer inflation data for July, South African bonds weakened by almost as much as 10 basis points last month.    The key government R153 bond was at 9.190% from its previous close of 9.120%, while the short-term R196 was bid at 9.450% from its previous close of 9.375%.  The longer-term R157 bond was at 8.470% from its previous 8.415%.  The rand was bid at 7.2596 from its overnight close of 7.2946.  A local bond trader stated that the CPI data was pretty bad which caused bonds to weaken by several points.  He also said that there is a limited supply in the market at the moment so they should come back a bit. Statistics South Africa said that South Africa’s consumer price index excluding mortgage rage changes for metro and other areas was up 6.5% y/y in July from 6.4% y/y in June.  The South African Reserve Bank for its inflation target uses this index. The 12-month rate of change in the consumer price index (CPI) for metropolitan areas was up 7.0% y/y in July from a 7.0% y/y increase in June.  Forecasts expected the CPI to have decreased marginally to 6.9% y/y with forecasts ranging from 6.6% to 7.2%. The core inflation rate, excluding volatile foods, municipal rates and monetary policy changes, was up 5.6% y/y in July from 5.7% y/y in June. Bond Exchange of South Africa statistics show that foreigners were net sellers of R1.986bn worth of South African bonds. Wed, 12 Sep 2007 08:49:35 +0000http://www.homeloans-sa.com/blog/property-news/bonds-weaken/http://www.homeloans-sa.com/blog/property-news/bonds-weaken/