Fewer buyers, but banks grant more home loans
South Africa - BetterBond
There has been a 4% increase in the number of home loans granted over the past 12 months, even though the number of home loan applications has fallen off by a similar percentage.
"This increase is partly due to the fact that many home buyers are financially better prepared than they were a year ago," says Rudi Botha of BetterBond, "but also a result of the increasing competition among lenders for new home loan business, as evidenced by the fact that more home loan applications are now being approved by the first bank to which they are submitted.
"Our statistics show that the percentage of first-bank approvals has risen from 46% to 50% over the past 12 months, correlated to a rise in the number of prospective buyers now obtaining bond pre-qualification so that they know their buying power and only make offers on homes they can afford."
Residential Property Affordability Review
South Africa - FNB
FNB’s 2 major Housing Market affordability Indices continued to show improvement (decline) in the final quarter of 2018, assisted by weak national average house price growth. Average house price growth for 2017 as a whole was only 3.8%, underperforming Per Capita Income growth significantly.
Moving into 2018, we believe that the home affordability improving trend of the past 2 years or so is likely to have continued, with average house price growth for the 1 st quarter of 2018 being a mere 2.7%. Then, in March, came a further 25 basis point interest rate cut by the SARB, which should assist affordability improvement mildly further in the 2nd quarter of this year.
However, it is conceivable that the improved home affordability trend could stall in the 2nd half of this year. We are of this view because the signs have been emerging recently of significantly improved domestic sentiment, and a noticeable rise in our FNB Estate Agent Survey Activity Rating in the 1st quarter, especially in the major Gauteng region. This could translate into faster house price growth, possibly even slightly above 5%, which would be close to Per Capita Income growth, Such an even would virtually stop the declining trend in the 2 home affordability indices, while our forecast of no further interest rate cuts from here on would not assist the Instalment/Per Capita Income Ratio Index’s decline any further either.
FNB Property Barometer
Residential building statistics
South Africa - Absa
Planning phase of residential building activity showing strong growth
Based on data released by Statistics South Africa, levels of building activity in the South African market for new private sector-financed housing (see explanatory notes) showed strong growth with regard to the planning phase in the first two months of 2018, with growth in the construction phase almost negligible over this period. However, growth in levels of activity differed significantly across the segments of housing in the two months up to February, which was to a large extent related to the base of calculation in each category a year ago.
The number of building plans approved for new housing increased by 38,2% year-on-year (y/y), or 3 024 plans, to 10 946 plans in January and February. This strong growth was driven by plans approved in the segment for houses smaller than 80m² increasing by 52,8% y/y to a total 3 439 over the two-month period, with the segment for flats and townhouses showing growth of 47,5% y/y to 5 337 plans in the first two months of the year.
Building stats Feb 2018