Brighter outlook for house prices

Posted On Tuesday, 21 January 2014 11:58 Published by
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Home owners and residential property investors are likely to start making money again on their bricks-and-mortar assets this year after a six-year housing slump.

John LoosHome owners and residential property investors are likely to start making money again on their bricks-and-mortar assets this year after a six-year housing slump.

While no-one expects the market to return to the 15%-plus growth rates regularly achieved during the boom years of 2003 2007, industry players agree that a shortage of residential stock and a more relaxed lending stance by banks should, at the very least, result in inflation beating price growth this year.

Last week FNB property strategist John Loos adjusted his house price growth outlook for 2014 upwards to 9%, from 6,5% at the end of November. Loos cites a recent uptick in mortgage lending and growing supply constraints as reasons for his improved outlook. If his 9% forecast is realised, it will be the highest price growth achieved by FNB’s housing index since 2007, when prices rose 11,2%.

Real estate agents appear equally optimistic. Pam Golding Property group CE Andrew Golding says there has been a rapid change in recent months, from a stock oversupply to a stock shortage in many areas across SA. “Major banks are also showing renewed vigour and appetite for mortgage lending, which bodes well for steady growth in volumes and prices.”

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, says the market could be further supported by a weak rand, which should encourage the return of foreign buyers. It is not only SA house prices that appear to be on the rebound. The latest global house price index from UK-based Knight Frank, which tracks 55 countries, surpassed its pre-financial crisis high for the first time in the third quarter of 2013. The index recorded growth of 4,6% for the year to September.

The index has been bolstered by a strong recovery in Dubai (the world’s best-performing housing market, with growth of 28,5% in the third quarter), Ireland and Hong Kong, as well as emerging markets such as China, Hong Kong, Taiwan, Turkey and Brazil. 

Last modified on Tuesday, 21 January 2014 20:55
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