Much of the news from South Africa’s property analysts has recently continued to downplay what is being achieved and the positives in our property scenario, says Bill Rawson, Chairman of the Rawson Property Group.
A recent accurate Absa survey (dated 8th October) shows that all three categories of housing in the middle segment (i.e. from 80 m2 to 400 m2) saw reduced growth in the first nine months of this year and predicts that growth in the year ahead will definitely remain in single digits.
Looking at the bigger picture and, particularly what is happening in the USA (despite turmoil in government circles and enormous debt), gives reason for renewed confidence in the South African scene, says Rawson, because in his experience the South African market tends to track that of the USA.
Quoting a recent Stanlib survey, Rawson says that despite higher taxes and the introduction of the Sequester, the USA household balance sheet has improved meaningfully, retail sales have maintained solid growth, industrial output is back almost to its previous high levels, the employment situation is improving (189,000 new jobs have been created per month in the last five months) and, significantly for the South African housing sector, house prices in the USA have risen by more than 10% in one year.
“Kevin Lings, Chief Economist of Stanlib, predicts that housing activity will continue to recover and that this will contribute about 0,3% to the US economic growth in 2013, currently running at just above 2%.”
These and other factors, says Rawson, raised the value of US household assets to almost $84 trillion at the end of the first quarter of this year and have also reduced home debt to a smaller percentage of overall household debt.
“The increased confidence and optimism now seen in the USA,” says Rawson, “will, I believe, be reflected in South Africa, as it has always done in the past, and the much improved performance in the US housing sector will also be seen here, especially now that repossessions are slowing down and in fact in some cases being terminated.”
Looking at the bigger picture & what is happening in the USA gives reason for renewed confidence in SA property...http://t.co/wuCxkjrupc
— RawsonPropertyGroup (@RawsonGroup) October 24, 2013
“Thus far in South Africa we have seen significant growth only in the lower priced properties. By the end of the first quarter of 2014 I am now inclined to think that middle and upper middle house prices will also be showing growth that is above the inflation rate and therefore encouraging to investors.”
