HOUSE MAR­KET HEAL­ING

Financial Mail - - EDITORIALS -

The pos­i­tive news com­ing out of the prop­erty sec­tor bodes well for the econ­omy. The FNB Es­tate Agent Sur­vey, in its first-quar­ter 2018 re­port, shows there is a slight de­cline in fi­nan­cial stress in the hous­ing mar­ket.

The house­hold debt-to-dis­pos­able in­come ra­tio fell to 71.2 in De­cem­ber, com­pared with 87.8 dur­ing the first quar­ter of 2008. This, says FNB prop­erty strate­gist John Loos, means SA should ex­pect an im­prove­ment in res­i­den­tial mar­ket fi­nan­cial stress. He lists three pos­i­tive con­tribut­ing fac­tors: a de­cline in the debt-to-dis­pos­able in­come ra­tio; mildly im­prov­ing eco­nomic growth; and the re­cent mild re­duc­tion in in­ter­est rates.

There was also a slight de­cline in the value of mort­gage ar­rears dur­ing the fourth quar­ter of 2017. Non­per­form­ing loans — ac­counts that have been in ar­rears for 90 days or more — also had a slight de­cline. The re­sult, ac­cord­ing to the sur­vey, is that to­tal ar­rears as a per­cent­age of the value of to­tal mort­gage ac­counts de­clined from a mul­ti­year high of 9.35% in the sec­ond quar­ter of 2016 to 8.4% at the end of 2017. The im­pact is clear. A decade ago, up to 34% of sell­ers re­ported putting their prop­er­ties on the mar­ket to scale down due to fi­nan­cial pres­sure. The cur­rent mod­er­ate stress levels in the hous­ing mar­ket lead Loos to con­clude that the mar­ket is “very much un­der con­trol”.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.