Although there is talk in what he describes as the ‘less informed’ circles of the South African property market about the possibility of experiencing a re-adjusting bubble burst in this market, this is so unlikely as to be almost not worth considering, says Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance.
“Perhaps the most significant of the data released recently,” said van Alphen, “is these figures related to ‘real’ (i.e. allowing for inflation) price growth. The Absa March Home Loans Review shows that in January this year, year-on-year real growth improved by 4,3%, its highest level since mid-2013. This, say the Absa analysts, reflects the slowing down in year-on-year inflation (to 4,4%), which in turn was caused by declining food price increases and the – regrettably probably temporary – lower fuel prices.”
Although 4,3% real growth may not be achievable in the second half of 2015, said van Alphen, housing price growth is set to remain at around these levels. This means that nominal (i.e. allowing for inflation) house price growth will remain close to the 8,4% year-on-year figure reported in February for middle segment homes.
“The current nominal growth does represent a slight decline since late last year,” said van Alphen, “but to me it appears to be an exceptionally good performance in an economy which in 2014 achieved only a 1,4% growth rate. Housing, as one of our Rawson spokespeople said recently, continues to plough its own furrow and to remain one of the safest and soundest of all the asset classes available to the man-on-the-street investor.”
For further information contact Mike van Alphen on (021) 658 7100.
