Housing market holding up
Overall activity in the housing market remains subdued as most South Africans continue to labour under high household debt levels.
But it appears there has been an uptick in sales to first-time buyers in recent months.
Data from mortgage originator BetterLife Home Loans shows that the percentage of home-loan applications from first-time buyers returned to positive growth territory in the 12 months ending September, compared with a decline of 3.9% in the previous 12 months.
“That indicates that demand has risen quite strongly even though most households are running on a very tight budget,” says BetterLife CEO Shaun Rademeyer.
He notes that the average price paid by first-time homebuyers has also accelerated, rising 5.8% to R739,000 over the same 12-month period. Interestingly, the average percentage of the purchase price that first-time buyers are paying as a cash deposit has also increased in the past year, reaching 12.2% at the end of September compared with 11% in the previous 12 months.
“The fact that first-time buyers are now managing to save an average R90,000 to put down as a deposit speaks volumes about their resolve to do whatever it takes to buy their own homes,” says Rademeyer.
Meanwhile, FNB property strategist John Loos says perceptions of financial stress in the housing market appear to be overstated. The percentage of homeowners believed to be selling to downscale due to financial pressure stood at about 12% in the third quarter, mildly up from 11% a year ago.
Loos says banks’ nonperforming loans show a similar trend, with the average year-to-date value of arrears as a percentage of the total value of mortgage accounts sitting at 9.3%, up from an average 8.5% in 2015. “Even these recently elevated levels remain far down on the 16% high recorded by banks in early 2009.” residential apartments in the R4m-plus price sector, but they are now becoming more conservative with their offered prices. We have also seen more stock coming onto the market — in fact at an escalating rate over the past few months — which means that buyers now have more of a choice.”
Mauerberger says last year the Atlantic Seaboard was short of stock and as a result buyers were prepared to pay much closer to asking prices. “We are now finding that buyers are at best prepared to pay between 8% and 10% below the asking price.”
Mauerberger says the freneticism that characterised the market over the past few years is gradually subsiding, with a noticeable shift from a sellers’ market to more favourable conditions for buyers. But he says sellers are under the belief that they can still get higher prices. “We are finding that buyers are simply walking away, rather than overpaying.” industrial and retail — and on an overall basis.
The top spots went to Growthpoint Properties, Attacq and SA Corporate Real Estate Fund respectively. Blue-chip mall owner Hyprop Investments won the award for best overall portfolio performance.
Attacq achieved a return of 16.5% for its office portfolio. The company owns a R27bn portfolio, including landmark commercial and retail property investments and developments. Waterfall City near Midrand, anchored by the newly opened Mall of Africa, is its largest single asset. Growthpoint Properties, the JSE’s largest SA-based property stock with a market cap close to R80bn was the best performer in the industrial sector, delivering total returns of 18.9% for the three-year period, while SA Corporate’s retail portfolio returned 18.6%.
Hyprop, which owns a R33bn portfolio, including 16 malls across SA, Ghana, Zambia and Nigeria, was the overall winner, with a total annualised return of 17.1%.
MSCI executive director in SA Stan Garrun says the awards are important, as reliable data is vital for informed investment decisions and to drive confidence in the sector: “Quality data underpins transparency, good systems and good governance.” He says active asset management such as developing, buying and selling is also included in the performance calculation.
Beautiful Bakoven on Cape Town’s Atlantic Seaboard