House prices to in­crease slowly

Financial Mail - Investors Monthly - - Opening Bell -

House prices are ex­pected to rise by only 3%-4% next year, prop­erty econ­o­mists pre­dict. That fol­lows an equally muted per­for­mance so far this year, with most in­dus­try play­ers ex­pect­ing growth of no more than 5% for 2016 as a whole.

FNB prop­erty strate­gist John Loos ex­pects av­er­age price growth to slow to 3% in 2017. Trans­ac­tion vol­umes (num­ber of sales) are also set to slow fur­ther over the next 12 months. Loos fore­casts a 6.3% de­cline in sales vol­umes this year and a 2% drop in 2017.

He says in his latest hous­ing re­view that the hous­ing mar­ket’s som­bre out­look should not be too sur­pris­ing, given higher in­ter­est rates in re­cent years and an eco­nomic growth rate that hov­ers not far from zero.

Loos ex­pects only a slight im­prove­ment in hous­ing mar­ket ac­tiv­ity in 2018, with the av­er­age price growth rate ex­pected to rise to 4.7% on the back of a mild pick-up in SA’s eco­nomic growth rate.

Absa Home Loans prop­erty an­a­lyst Jac­ques du Toit is equally bear­ish. He ex­pects growth to slow to 4.6% for 2016 as a whole (from 6.1% in 2015). Next year av­er­age growth should be 3.7%. Du Toit says house prices have al­ready slowed markedly in the third quar­ter as SA house­holds con­tinue to labour un­der high debt lev­els, which has put a brake on mort­gage lend­ing.

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