The widespread media coverage given to the latest banks’ home loan division comments on the downward trend in South African house prices has led to some of the general public questioning the bullish growth claims that certain estate agents have been making for most of this year regarding prices in their areas.
This was said recently by Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance. However, he said, no agents with whom he has dealt in the last two months have in his opinion in any way fudged their figures and on investigation almost all the bullish reports have turned out to be based on sound data.
ABSA Home Loans’ highly respected Chief Economist, Jacques du Toit, reported early this month that nominal year-on-year house price growth in April this year had declined to 5,7% and that since October 2014, when it touched 10%, it had been dropping steadily. As a result, say ABSA, the average price of a medium sized home in South Africa today is now R1,205,000, while small homes have an average price of R851,000 and larger homes R1,828,000.
Statements of this kind, based on thorough research and accurate figures, said van Alphen, appear to belie the sort of statements made by numerous Rawson Property Group franchisees in high demand areas. For example, Rawson’s Brackenfell and Somerset West franchisees have both recently reported an 11% year-on-year growth in the houses in their areas, while John Birkett of the Rawson Claremont franchise has reported even higher figures (up to 25%) on certain sectional title units in the central Cape Peninsula suburbs. Alisdair Crofton of the Cape Town CBD franchise has also claimed double digit growth for the units in his area and further afield Rawson’s Dainfern franchise in Gauteng and in the Upper Highway and Umhlanga areas in KZN have also reported growth above 10%.
“It has to be realised that the banks’ figures are definitely a national average and, as so many spokespeople for the property sector have said, there are numerous area pockets which, owing largely to a lack of stock, are performing way ahead of the unexciting national figure.
“It also has to be accepted that, as the ABSA figures have made clear, the satisfactory overall growth performance has not been a flash in the pan - in fact it dates back to early 2013 when a 10% growth rate was achieved. No doubt the negative factors mentioned by ABSA – including the country’s poor economic performance, the diminished confidence and the large amount of poor credit risk profiles as well as widespread difficulties throughout the country in making households finances meet – have all limited house price growth. However, as always, sections of the market have bucked the trend and for the foreseeable future will continue to do so. The confident outlook of so many of estate agents is therefore, I believe, fully justified.”
For further information contact Mike van Alphen on 021 658 7100.
